Purchasing a vehicle is a dream come true, especially when you love to take charge of commuting. Having at least one two-wheeler to support your conveyance is necessary when living in a metropolitan city with busy roads.
However, your credit score may not be up to the mark as a new employee or a youngster. This makes it hard for you to get motorbike finance for bad credit. If you need a loan with a bad credit score, here are some tips to help you.
What is a bad credit score?
Several factors affect an individual’s credit score. Generally, the score ranges from 300 to 900—with 300 being the lowest and 900 the highest. Hence, one must always aim toward maintaining a credit score of at least 650 to 900 to enjoy the financing facilities it offers.
Moreover, boosting your credit card snot might be demanding as you are a new credit card holder. Thus, it could create problems if you try to seek motorbike finance for bad credit scores at this stage.
The following section gives a brief insight into getting a motorbike loan despite having a poor credit score.
Motorbike finance options for bad credit scores
A motorcycle loan through a credit card is unsecured, unlike the usual process for seeking loans. Thus, if the credit score is not up to the mark, it is easier to turn to a secured loan process backed by collateral.
In this case, the collateral would be the vehicle you seek a loan for. You might find secured loans profitable because they have lower interest rates. The motorbike financing through a secured loan is also shorter than a regular automotive loan.
Keeping this in mind, the following section discusses some disadvantages of poor credit scores if you require a loan for your motorbike.
Disadvantages of having a poor credit score
A credit score builds up depending on the credibility of the loan seeker to repay the amount due. Apart from being unable to afford motorbike finance, there are other disadvantages to poor credit scores. Some of these demerits are mentioned below:
- Restricted choices: In today’s era, every company or bank offers a credit card with their add-ons. You don’t enjoy the benefit of all these credit cards with a poor credit score. Hence, your choices are monitored and restricted because the lender considers multiple factors before issuing a credit card.
- Higher interest rates: The better your credit score, the better the interest rates on your loan. While you may still be eligible for unsecured loans in some sectors, the interest rate would kill the deal for you. This is because people with low credit scores are risky customers for the company. Hence, they might charge a higher amount when returning the loan.
- Lack of rewards: People prefer credit cards because they receive a lot of cashback, reward points, and gifts. With a poor score, getting rewards and incentives won’t be easy. Thus, you might miss many offers, discounts, and other provisions.
Considering the benefits of having a better credit score, it is easy to conclude that a high credit score is essential in receiving a loan. Thus, if you plan to avail yourself of motorbike finance, you can either improve your credit score or go for an unsecured loan with a higher interest rate.