The Finance Blogger


Bad Credit Motorcycle Loan

Bad Credit Motorcycle LoanLast week we were asked for help from a reader who is looking for a motorcycle loan to help him purchase a used motorcycle for a total cost of $25000.  His credit rating is considered bad due to some payment problems he had on another loan. He indicates that he failed to make some payments on the loan. Which drove his credit rating into the basement. However he has since repaid the entire loan.

Unfortunately for this reader, his situation is a good example of why you should always pay your loans and other monthly payments on time. It takes very little to end up with a bad credit rating. Then you are stuck looking for bad credit motorcycle loans at high interest rates and not so great terms. This reader is facing in all likely hood payments that will be in the $500 a month range. Even if he is successful at obtaining a loan at 6% spread over five years for $25,000. He is facing payments of at least $473 per month. Then he will need to add insurance as well to the monthly payments.

Lower Priced Motorcycle to reduce his Motorcycle Loan

He probably should look for something a little less expensive at this stage. At least until his credit rating is in better shape and he has saved a little money that can be used as a down payment. Even if he only borrowed $20,000, his monthly payments would decline to approximately – $378, almost a savings of $100 a month. This is substantial when you make $500 a week.

If he can find something more affordable, make all his payments and repay the loan in total he will go along way towards improving his credit rating. Another approach is of course to negotiate a better deal for this particular bike and come up with a larger down payment. Both will go along way towards reducing his monthly payments.

Finding a Lender for a Bad Credit Motorcycle Loan

There are lenders willing to lend money for this type of loan to people with bad credit. They usually charge a high interest rate and processing fees that are designed to recover their costs in case of default. This is an expensive way to find a loan.

Many banks will not even touch this type of client unless they have a personal relationship with the client. One of the best ways to establish a long term business relationship with a bank is to do all of your business with one branch, get to know the loans officer or the investment manager at the branch. Always make a point of saying hello to them when you are in the bank and always repay your loans. In fact if you have a bad credit rating, arrange for a small loan and then repay it as per the agreed to contract. Doing this immediately establishes your credit rating again and shows that you can and will repay loans.

Next time you need a larger loan, you may not be looking for something like a bad credit motorcycle loan. Instead you can negotiate with the lender for a better term! Consider using a broker as well to help you find a loan that is more competitive in terms of interest rate and associated fees.

Comments and suggestions are welcome as usual. We take your questions and will post answers here on our blog. For more posts about bad credit situations and what to do about it, click here.

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2 Responses to “Bad Credit Motorcycle Loan”

  1. this is good advice. I had to fight my way back from a bad credit rating. it too several years, but I am back now with a great rating and able to borrow money at reasonable rates.

  2. Auctioned Cars

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