Countless articles cover refinancing a car or terminating car leases prematurely today. But, what about motorcycle loans? Does it work the same way it does with a regular car loan? The answer is yes, you can refinance your motorcycle loan, and we’re going to explain it in-depth below.
Similar to refinancing a car, when it comes to refinancing a purchase as expensive as a motorcycle, you want to do your due diligence and make sure that all information has been considered and reviewed. There are plenty of aspects that culminate in the final decision, which brings us to the first important question of the article: why do you want to refinance your motorcycle?
Figuring out your ‘why’ can help you make a more informed decision down the line. Maybe your monthly payments are too high, or your spouse lost their job. Or, perhaps your credit score has changed dramatically, and you feel you can secure a more favorable interest rate that is related to your eligibility as a borrower. Think about why it is that you want to lock in a new loan rate for you and your motorcycle as you learn more about your options.
You will be able to save money if you refinance to a lower annual percentage rate (APR), but you will also need to lower your payment as well – which can be done by refinancing for a longer term. Whether you are trying to pay off your bike more quickly, or simply lower your monthly payments, you will be able to save money when refinancing your motorcycle loan.
If all of this sounds confusing, it’s because it can be if you don’t review the information thoroughly. Regardless of your reason for refinancing, any vehicle or motorcycle loan is up for negotiation, especially if your credit score changes. It may be possible to even refinance with poor credit, but do note, the trade-off is higher interest rates in the end. That’s why you always need to do a side-by-side comparison of pricing options over the course of the loan term so you know if you are selecting the option that is best for you.
How to Refinance a Motorcycle Loan
We’ve been conditioned to assume that refinancing anything is a lengthy and complex process. In fact, with proper preparation, refinancing doesn’t have to be overwhelming at all. Lowering the cost of your motorcycle financing can save you thousands over time, which can make the entire process worth it. Will it require extra time from you? Yes. But if you align with the right lenders, you can save time and money throughout the payment cycle of your motorcycle.
So, you’re ready to learn more about refinancing your motorcycle. You want to figure out if there are savings in the refinancing process and all of the title fees that will be paid for by the interest savings. We applaud you for taking this first initiative, and learning more about what refinancing a motorcycle loan can do for you.
Next, it’s time to think about the actual rates. How do you know if you are agreeing to a good rate?
Step 1: Sift Through Your Options. When you know how much you need to borrow, you can start to compare rates and how they stack up against what you currently pay. Rates will vary by lender, your credit score, and the age and make of your motorcycle. Each lender will come with its own credit score requirements. In general, the higher your credit score, the better the rate you will be able to secure.
Step 2: Use the Internet. There are many online tools that can help you arrive at a final number for repaying a loan. One of the tools is a refinance calculator, which can help you organize the loan amount and term, and how that relates to a final monetary amount.
Step 3: Check Your Credit Score. When you apply for refinancing, lenders will submit a hard inquiry on your credit. This will temporarily lower your score (it will bounce back). That’s why you want to check your credit score ahead of time, so you know your current standing. You want to do your homework and pick the one company you believe will work in tandem with your loan requirements.
Step 4: Look Out for Fees. The fees are where a lot of these companies make their money and are written right into the leasing or lending contract. The fees can come from a variety of things related to the application process. Be sure to ask any potential lenders if they charge any fees.
Step 5: Collect Your Documents. By organizing the documentation you are going to need ahead of time, you will be able to expedite the process more quickly. Things you can gather include the vehicle identification number, the make and model, the value of your bike, and the bike’s insurance information. When all of this is gathered, you can complete the application form quickly and submit it.
If the lender agrees to take you on, you will need assistance in paying off the loan since the lender will not permit you to pay it off on your own. Once this is done, you will begin paying monthly payments to the new one. Be sure to always check that the old loan has been settled before you stop making your payments on it. If the refinancing does not overlap, you could be pegged with a late payment penalty that will impact your credit score.
Refinancing your motorcycle loan can be a viable option for you if you want to save money or benefit from an improvement in a credit score. Here at Auto Approve, we make refinancing painless for our clients, which is why we want you to know we can support you through the process.
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