Yes, you need a credit score to get financed for a motorcycle. Motorcycle financing acts just like any vehicle financing. Your credit score is an important consideration in your motorcycle loan application. Indeed, how good or bad credit is is reflected on the motorcycle loan pricing.
Your Credit Score and Motorcycle Loan
To qualify for a motorcycle loan, you should be able to meet a certain credit score threshold. Now this minimum credit score varies among lenders. Some lenders would require a basic score of less than 620. Still, other lenders only deal with borrowers having a credit score of 680.
But if there’s one thing you have to realize, it’s this: credit scores are used by lenders to determine your interest rates. Those with credit scores in the high 700’s will likely get the best rates as opposed to those in the low 500’s.
Of course, you can still get motorcycle financing if you meet the lender’s credit score requirement. But you may have to pay higher fees if your numbers are not enough to merit the best rates. This higher rate could only command higher monthly payments, something that you may not afford later on or eat your budget in the long run.
Credit Score Scenarios and Considerations
Against this backdrop, we have come up with some credit-related scenarios and what possible actions you can undertake.
Scenario 1: You have a low credit score. Having poor credit is indeed a problem, but it’s not something that will haunt you forever.
What you can do:
- You can ask someone with good enough credit and income to co-sign the loan with you. Having a co-signer might boost your loan application and just possibly get you a better loan deal.
- You can show how good of a borrower you are through your credit report. Having an established payment history without any missed payments plus a credit score that is improving will make you a good case before the lenders.
- You can apply for a motorcycle loan pre-approval. This is a good way to learn about your credit score and any credit-related issues that you can still correct.
Scenario 2: You have a high credit score but limited history. Some people pay almost all their purchases in cash. They seldom finance anything and if they do, they pay off the balance in full. This contributes to their having a limited payment history or relatively young credit history. Some lenders may find this literally spotless credit history lacking and a ground for loan denial.
What you can do:
- If you’ve been denied on the basis of an inadequate credit history by traditional banks, try credit unions. They usually have less stringent requirements and guidelines.
- You can apply for a new credit beforehand to build your payment history. The impact on your credit score is said to be little as multiple inquiries in a short period of time are treated as a single inquiry.
It’s established that your credit score plays an important role in your loan application. But, it’s just one facet that lenders consider along with your ability to repay debt and more. Don’t give up on your credit score or your motorbike just yet as you can still find loans if you know how and where to look.