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Do you need a high credit score to finance a motorcycle, or is a credit score as low as 600 is good enough?
Your credit score plays a significant role in the lender's decision-making process and determines the terms and interest rate you may qualify for.
In this article, we’re discussing what credit score is needed to buy a motorcycle, whether or not financing a motorcycle builds credit, tips for getting a motorcycle loans, and more.
Key Takeaways
- Ideally, you’ll need a credit score of 620 or higher to qualify for a motorcycle loan. However, certain online lenders may be able to provide you with motorcycle financing with a lower credit score.
- Individuals with excellent credit scores (above 720) are more likely to qualify for the lowest interest rates on motorcycle loans.
- Maintaining a good credit history, paying bills on time, and keeping credit card balances low can improve your chances of securing a motorcycle loan with favorable terms and rates.
What Credit Score Do You Need to Buy a Motorcycle?
The minimum credit score required for motorcycle financing can vary depending on the lender and the type of loan.
Excellent credit scores may offer borrowers access to lower interest rates and more favorable loan terms, while lower credit scores may result in higher rates or the need for a co-signer.
Factors such as payment history, credit utilization, and income can also impact a lender's decision to approve a motorcycle loans.
Is It Hard to Finance a Motorcycle?
To finance a motorcycle you need to meet certain loan requirements and qualification criteria, including the down payment amount.
One of the most important factors that lenders consider when approving a motorcycle loan is your credit score. While the exact credit score required can vary between lenders, having a higher credit score will typically result in better loan terms and lower interest rates.
It is recommended to have a credit score of at least 620 to increase your chances of getting approved for motorcycle loans.
In addition to your credit score, lenders will also assess your income, employment history, and debt-to-income ratio. Lenders want to ensure that you have a stable source of income and have the capacity to make monthly loan payments without financial strain.
What Credit Score Do You Need to Finance a Motorcycle?
When it comes to buying a motorcycle, there is no fixed minimum credit score requirement. However, having a higher credit score can greatly increase your chances of qualifying for a loan and getting better rates and terms. Many lenders prefer borrowers with a credit score of 620 or above.
If you have a credit score lower than 620, don't worry. There are still options available to finance a motorcycle. Some lenders specialize in working with individuals who have less-than-perfect credit. However, keep in mind that these loans may come with higher interest rates.
Other Motorcycle Loan Requirements
In addition to credit score, there are other common requirements that lenders consider when evaluating a borrower's eligibility for motorcycle loans. It's important to note that these requirements may vary from lender to lender.
- Using the motorcycle as collateral—Some lenders use the motorcycle itself as collateral for secured motorcycle loans. This means that if the borrower fails to make payments, the lender can take possession of the motorcycle to recover their losses.
- Obtaining a cosigner—If an individual's credit score is too low to meet the lender's requirements, they may have the option to have a cosigner. A cosigner is someone with better credit who agrees to take responsibility for the loan if the borrower is unable to make payments.
- Meeting minimum income requirements—Most lenders have minimum income requirements to ensure that the borrower will be able to afford the monthly loan payments.
- The motorcycle itself must meet certain criteria—This may include factors such as the age of the motorcycle, its mileage, and whether it has any modifications. Loan terms and conditions may also vary based on the type, make, and model of the motorcycle.
Does Financing a Motorcycle Build Credit?
When it comes to building credit, financing a motorcycle can be a beneficial strategy.
Applying for motorcycle loans may initially cause a slight drop in your credit score due to the hard credit inquiry, but the positive payment history you'll establish can help boost your credit over time.
Making timely payments on motorcycle loans demonstrates to lenders that you are a responsible borrower. This consistent payment history shows that you can manage credit effectively, which can positively impact your credit score.
Examples of New and Used Motorcycle Loans
Whether you plan on financing a new or used motorcycle, there are many unsecured motorcycle loans to choose from, including:
1. Upstart
Upstart offers motorcycle loans for new and used bikes with competitive interest rates and flexible repayment terms.
- Pros: Upstart considers factors beyond just your credit score, such as your education and job history, which can benefit borrowers with limited credit history.
- Cons: Upstart requires a minimum credit score of 600, which may exclude some individuals with lower credit scores.
2. SoFi
SoFi provides loans for new and used motorcycles with low interest rates, no origination fees, and flexible repayment options.
- Pros: SoFi offers a simple online application process and provides access to additional benefits such as career counseling and member events.
- Cons: SoFi requires applicants to have a minimum credit score of 680, which may limit availability for individuals with lower credit scores.
3. OneMain Financial
OneMain Financial offers unsecured motorcycle loans you can use to buy a new or used motorcycle. They have flexible loan terms and accept lower credit scores.
- Pros: OneMain Financial accepts credit scores as low as 580, making it an option for individuals with fair credit. They also have multiple branch locations for in-person assistance.
- Cons: The interest rates at OneMain Financial may be higher compared to other unsecured loan companies.
Motorcycle Loans for Fair Credit
If you have fair credit, OneMain Financial is a lender worth looking into. As mentioned above, OneMain Financial requires a minimum credit score of just 580.
Loan amounts range from $1,500-$20,000 with terms up to 60 months.
Bad Credit Motorcycle Loans
If you have bad credit, Upstart offers motorcycle loans with a minimum credit score requirement of as low as 300. Loan amounts range from $1,000-$50,000 with terms up to five years.
Rates are competitive and start at just 5.40%. However, if you have bad credit, you most likely will not qualify for the best rates.
6 Tips for Taking Out a Loan for a Motorcycle
When it comes to taking out motorcycle loans, there are a few tips to keep in mind to ensure a smooth borrowing experience. Here are six tips to help you navigate the process:
1. Review your credit report for mistakes: Before applying for a loan and deciding on a down payment, check your credit report for any errors that could negatively impact your credit score. Rectify any mistakes to improve your chances of securing favorable loan terms.
2. Set a reasonable budget and stick with it: Determine how much you can comfortably afford to borrow and repay. Consider factors such as the purchase price, insurance costs, maintenance expenses, monthly payments, and down payment amount. Stick to this budget to avoid overextending yourself financially.
3. Review qualification criteria from different lenders: Research the qualification criteria of multiple lenders to find the ones that are more likely to approve your motorcycle loan application. Some lenders may have specific minimum credit score requirements, so finding lenders that cater to individuals with your credit profile can increase your chances of approval.
4. Shop around for the lowest interest rates: Compare interest rates from different lenders to ensure you secure the most affordable loan. Even a slightly lower interest rate can save you a significant amount of money over the life of the loan.
5. Make sure you understand and can follow the repayment terms: Carefully review the loan’s repayment terms, including the interest rate, loan duration, and monthly payment amount. Ensure you understand these terms and can comfortably meet the repayment obligations.
6. Consider additional motorcycle loan features: Consider any additional loan features that lenders may offer, such as automatic payments, flexible repayment options, or loan refinancing opportunities. These features can enhance your borrowing experience and potentially save you money in the long run.
Final Word: Understanding the Minimum Credit Score Requirements for a Motorcycle Loan
While each lender may have different requirements, generally a credit score of 620 or above is considered good and can help you secure more favorable motorcycle loan terms.
However, if your credit score falls below this threshold, there are lenders who specialize in working with individuals with poor or fair credit. They may have slightly higher interest rates or stricter terms, but they can still help you finance a motorcycle purchase.
Remember to shop around for the best interest rates and loan terms. Different lenders offer a wide range of options, so take the time to compare and choose the one that suits your needs and budget.
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