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Publish Date - November 30, 2022

Author: Moses Mwangi

Categories:   Refinance To Save   

Can You Refinance a Motorcycle Loan? 6 Steps for Refinancing a Motorcycle Loan

You may have heard about refinancing an auto loan and wondered whether it's possible with a motorcycle. The short answer is yes. You can refinance a motorcycle loan, and it actually works the same as refinancing a car loan.

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You may have heard about refinancing an auto loan and wondered whether it's possible with a motorcycle. The short answer is yes. You can refinance a motorcycle loan, and it actually works the same as refinancing a car loan.

However, there are several aspects to consider before you refinance your motorcycle loan, including why you want to refinance. It could be because your current monthly payments are high, or you might save money if you refinance a lower annual percentage rate (APR).

Regardless of the reason, refinancing a motorcycle loan can be an excellent option for people with a healthy credit history and a two-wheeler with a higher value than what is owed on the loan.

It's possible to refinance a motorcycle loan with a poor credit score, but you will most likely pay high-interest rates. That's why it is always important to do your homework and shop for a lender that best fits your credit situation. Picking the best term and interest rate can ultimately save you money in the long run.

How to refinance your motorcycle loan

Refinancing a motorcycle is a common procedure that is ways simple than you may think. However, just like refinancing a car loan, it has some aspects that you should consider before choosing a lender and applying for the refinance loan. Here are some steps to refinance your motorcycle loan.

1. Consider the advantages and disadvantages of motorcycle refinancing

Before deciding whether to apply for a new loan, consider the benefits and drawbacks of refinancing your motorcycle. Some benefits include lower monthly payments, better interest rates, and shorter loan terms. The disadvantages, on the other hand, include prepayment penalties, costs and fees of refinancing, and consolidated debt.

It's up to you to determine which case is best for your needs in every scenario. Work with your loan provider to request a quote, gather information regarding the costs involved in the process, and consider both the pros and cons of refinancing your motorcycle.

2. Contact your current lender

To refinance your motorcycle loan, you must ensure you are up to date on your current loan repayments. The potential lender will want to know your payoff amount and how much you still owe the current lender. Your current lender will give you a payoff amount that will be valid for a given period of time, usually two weeks.

In addition, find out how much you will incur as a one-off or ongoing fee when refinancing. For instance, your current lender may charge you an early payoff fee, while your prospective loan provider might charge refinancing or application fees. The fees vary from one lender to another, so be sure to ask your potential lender whether they charge any fees.

It's also good to assess the value of your motorcycle at the time of refinancing. If you owe more money than the value of your motorbike, lenders are likely to tag you as a higher-risk borrower, making it more difficult to acquire a new loan.

3. Check your credit report and credit score

Before applying for a new loan, check your credit report to be sure there are no errors or wrong information. Along with other details, potential lenders may use your credit history and credit score when making their lending decisions. They want to know how likely you are to repay the money they lend.

A higher credit score gives you a better chance of getting fast approval for a loan. A good credit score can also land you better loan terms and lower interest rates. However, you should limit the number of times lenders check your credit report, as each credit inquiry reduces your credit score.

You can review your credit report and credit score from any of the three credit bureaus: TransUnion, Experian, or Equifax. If you find any issues, file disputes right away with an applicable credit reporting agency to have the errors fixed before you apply for a new loan.

4. Gather all the required documents

Put together all the documentation required to process your loan application. Of course, you can wait until you apply to gather everything you will need, but doing so might delay the processing of your loan application.

The most needed documents include the following:

  • Your driver's license
  • Motorbike identification number
  • Your bike's insurance details
  • The make and model of your motorcycle
  • Your motorbike's value

With all these documents, you will be able to complete the application process more quickly.

5. Compare several motorcycles refinance lenders

A loan's terms and interest rates vary from one lender to another, so it's a good idea to shop around for several options. In addition, lenders will have different criteria for aspects such as credit score. Generally, the higher your credit score, the more likely you can secure a loan with affordable interest rates and vice versa. Write a list of lenders with the best rates, special offers, and discounts, and choose one that best fits your needs. You should also consider the total amount you will be paying over the life of your loan.

6. Apply for motorcycle refinance

Once you have settled on the most reliable lender for your financial situation, you can submit your loan application through your mobile app or online. As with any loan, the lender will post an inquiry to your consumer credit report and confirm any details needed to complete the application. You will receive a notification from the lender if your loan is approved.

Depending on your chosen lender, the approval process typically takes between two hours to two days. Once approved, your previous loan will be repaid entirely, so you only need to worry about your new motorcycle loan.

Summing it up

Refinancing your motorcycle can be a great option when you are looking to save money on your monthly payments, reduce your APR, or if your credit score has improved over the last few years. With competitive rates, flexible repayment terms, and no payments for up to two months, you might save much with motorcycle refinancing. All you need to do is choose an option that works best for you, sign the loan documents, and you will be on your way to a better loan as quickly as possible.