Qualifying for a powersport loan carries its own set of challenges. However, all of these challenges can be overcome with the proper strategy. This article will share that strategy. This article starts at the beginning of the loan process and works through exactly how to qualify for a powersport loan.
Getting a Powersport Loan
Many people get car loans. Many people get mortgages. Powersport loans, however, are far less common. There are a multitude of reasons as to why. For starters, nearly everyone needs a car and a home. Does everyone need a Ducati Superbike 1299 Panigale S? No. Motorcycles, ATVs, snowmobiles, jet skis, and their respective trailers are seen as luxuries in the eyes of most lenders. These recreational loans also carry risk simply for the fact that operating these vehicles is dangerous. Lenders know that the dead can't pay their bills. But all of the above challenges are mere bumps in the road. Now that the struggles are understood, it's time to overcome them.
First, check your credit score. Powersport loans often require higher credit scores than car loans. For a good reference point, remember what your score was when you got your car loan. Were you happy with the interest rate? To get the same rate on a powersport loan, you will likely need a higher score. A FICO score of 720 and above is considered excellent.
Next, you'll next want to see how much motorcycle/ATV/snowmobile/jet ski you can afford. This is a good idea to do before approaching a lender. See how much you feel comfortable spending before borrowing. Know how much you can comfortably put down and how much you could spend monthly. Keep in mind that there are many other costs associated with getting another vehicle: fuel, insurance, safety equipment, a trailer, accessories, and more.
Now, before actually approaching different lenders, you need to know what institutions want to see in a borrower. This step is kind of like going to a job interview when you already know what the employer wants in an employee. It's smart.
Lenders want applicants with a good credit score, as mentioned earlier. Lenders also want applicants with a low debt-to-income ratio. Your debt-to-income ratio is how much money you owe compared to the amount of money you currently earn. Lenders also consider the age of the recreational vehicle. You're likely to get a better rate on a new recreational vehicle than a used vehicle. This is because if you default on the loan, the vehicle will still have a good resale value. A lender doesn't want to get stuck having to get rid of an old vehicle.
Understanding Your Loan Options
Now is the time to understand your loan options. The types of financing options include: dealer financing, OEM financing, credit card or a private powersport loan (typically from an online lender, bank or credit union). It's best to compare loan terms and rates across the board. Shopping around for rates may seem tedious. But if you can save hundreds over the life of the loan, it's likely worth the initial time investment. Use an online loan aggregation tool to speed up this process.
This article described exactly how to qualify for a powersport loan. Remember, a powersport loan is a recreational loan, not a conventional loan. Since these loans are seen as wants rather than needs, it makes getting approval slightly harder. This is typically true even if the motorcycle will be used as a primary vehicle. But with this article, you now know how to harness one of these tricky loans. Now go have fun out there!