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Having a bad credit rating can affect how willing credit companies are to offer prospective borrowers finance. However, some niche lenders work exclusively with bad credit borrowers, and others may make exceptions on a case-by-case basis, depending on the financial circumstances of their customers.
When it comes to applying for a bike loan with a bad credit history, there are a number of options available to compare.
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* This statement is an Australian Government requirement under the National Consumer Credit Protection Act 2009.
A bad credit bike loan is a type of personal loan that allows customers to borrow the funds they need to purchase a motorbike. They then repay the money they have borrowed, plus any interest that accrues on the loan amount over a term that can range from one to seven years, though many lenders offer maximum terms of two or three years.
For customers with poor credit histories, these loans tend to attract higher interest rates and fees than loans offered to borrowers with good credit. These fees may include the maximum establishment, monthly and default fees, as well as the highest interest rate as allowed by the Australian Securities and Investment Commission (ASIC).
In many cases, finance borrowers are required to offer their motorbike as security for the loan. Secured finance usually increases the chance of approval and may lower the interest rate offered to customers with bad credit ratings.
Unsecured financing for bad credit is available in certain circumstances, but this means you’ll need to deal with a wide range of restrictions including a higher interest rate and typically very short loan terms.
Bad credit bike loans are available with fixed or variable interest rates. Many lenders will only offer loans of up to $5,000, but larger loans of up to $10,000 may be available for customers who satisfy all the relevant lending criteria.
While buying a motorbike is usually significantly cheaper than buying a car, a new bike will still be quite an expensive purchase. With this in mind, it’s highly advisable to shop around and compare a range of bad credit bike loans before choosing one.
Before comparing bike loans, consider just how soon the bike is needed. For customers with bad credit, it's important to carefully consider whether there is any time to improve their credit scores prior to submitting an application. For customers who do not necessarily need to buy a bike right away, it might be worth waiting and taking some steps to raise their credit score and therefore improve their chances of securing a better finance deal.
For those ready to apply for finance now, make sure to consider the following factors when comparing bad credit bike loans:
There are a few traps and pitfalls to be wary of when shopping around for a bad credit bike loan. These include:
All bad credit loan applicants should bear in mind that loan applications, and rejections show up on their credit records and multiple applications during a short period of time act as a red flag for lenders. Therefore, it is important for all prospective applicants that they strive to include all of the relevant information in order to minimise chances of rejection and subsequent further damage to their credit histories.
Applicants ought to find a loan that matches all of their borrowing needs and for which they are eligible to apply, then keep the following checklist in mind when preparing their application:
How much a bike loan for bad credit borrowers will depend on a number of factors, including the applicant's income, their credit rating and the loan security (the bike, in most cases). Below is an example of how much someone might expect to pay on a loan of $3,000 with poor credit if they leave the bike as security on the loan.
Example
Laura is approved for a medium personal loan of $3,000 to be repaid over a period of 5 years. Laura is allocated a 35% annual interest rate. She also has to pay $10 per month in fees. If she meets her payments on time, her repayments will be:
Establishment fee: $400
Monthly fees (total): $600
Monthly repayments (x60 payments): $116
Total to be repaid (including all fees): $7,388
Total interest paid on principal (including all fees): $4,388*
*Please note that this example is fictional and should not be taken as an accurate representation of what an individual applicant can expect to be offered by a lender. The calculations are merely a representation of how much someone would pay over a certain period of time with this particular interest rate and these particular fees.
If a bad credit bike loan isn't the best fit for your finances, there are some other options. One example to consider is the possibility of using a credit card to pay for a new bike. Customers may be able to take advantage of a 0% p.a. introductory interest rate offer, which could make paying for a bike with a credit card a more affordable option than a high interest loan, in some cases. For those considering paying for a bike with plastic, there are a number of factors to consider.
Another option for avoiding bad credit borrowing, as mentioned earlier, is to wait until your credit file is in better shape. There are plenty of things you can do to improve your credit score, including disputing any incorrect listings, and in the interim you can keep putting money aside in a savings account so that the amount you eventually need to borrow (if any) will be reduced.
Yes. Earning a regular income and being able to show a steady history of employment is a requirement of many lenders. However, some lenders will accept applicants on Centrelink payments. If you’re still in the probationary period at your current job, you’ll most likely find it difficult to get approved.
You should be very wary of lenders offering these types of loans, since a credit check is an essential part of the responsible lending process.
Yes, it’s still possible to qualify for a loan if you receive Centrelink payments. However, those payments must represent no more than a specified maximum percentage (specified by the lender) of your total income.
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