It’s no secret that auto loan refinancing is readily available at several banks, credit unions and online lenders. But is it an option for a motorcycle loan? In short, yes, and getting a new loan with better terms doesn’t have to be complicated if you take the steps outlined below.
Refinance Your Auto Loan
How Motorcycle Refinancing Works
Before diving into how to go about refinancing your motorcycle loan, you should understand how it works. Simply put, it involves getting a new loan in place of the one you currently have to secure a lower interest rate, monthly payment or get a shorter or longer term.
Steps To Refinance Your Motorcycle Loan
1. Consider Pros and Cons Of Refinancing Your Motorcycle
You should consider the benefits and drawbacks of motorcycle refinancing before deciding if you should apply for a new loan.
Pros Of Refinancing Your Motorcycle
- You could get a lower monthly payment and use the funds to meet other financial goals.
- You may qualify for a better interest rate if your credit score has improved and you now have good credit, or market conditions have changed since you took out your current loan.
- You could get a shorter loan term and pay off your motorcycle loan faster.
Cons Of Refinancing Your Motorcycle
- The lender may extend your loan term, which means you could pay more interest.
- You could be on the hook for prepayment penalties if they’re assessed by your current lender.
- Some financial institutions assess refinancing fees.
If the benefits of refinancing your motorcycle loan outweigh the costs, move forward with the next steps.
2. Check Your Current Motorcycle Loan Details
Lenders will request information about your current motorcycle loan before you apply. So, it’s best to have a copy of your loan contract handy before starting the formal application process. Also, note your motorcycle’s make and model, age, your current monthly payment and the amount you need to borrow since the lender will ask for this information when you apply.
3. Check Your Credit
Take a look at your credit score to know where you stand and avoid any surprises. Ideally, you want to have a good or excellent credit score to secure the best interest rate. But even if your credit score isn’t quite where you want it to be, you could still get a lower interest rate if market conditions have changed since you took out your current loan.
It’s equally important to review your credit reports from the three credit bureaus – Experian, TransUnion and Equifax; if you spot any issues, file disputes promptly with the applicable credit reporting agency.
4. Put Together Required Documents
The final step before researching and selecting a lender is gathering the required documents and information to process your loan application. Of course, you can wait until you apply to collect everything you’ll need, but doing so could delay processing your loan application.
Refinance Your Auto Loan
5. Compare Motorcycle Refinance Lenders
There’s no shortage of motorcycle refinance lenders to choose from. However, you can also use an online platform like Auto Approve to simplify the refinancing process. Here’s how it works:
- Step 1: Get a free, no-obligation quote on Auto Approve’s website without impacting your credit score. Start by filling out this form.
- Step 2: Review loan offers from banks and credit unions in the Auto Approve network. Keep in mind that low-rate loans are generally reserved for prospective borrowers with a steady income and a solid credit history. If you’re unable to prequalify for the best deal due to issues with your credit profile, you could still get approved if you meet the lender’s minimum eligibility requirements. But you’ll likely get offered higher rates.
- Step 3: Let Auto Approve do the legwork for you to finalize the loan application. This means you won’t have to go back and forth with a loan officer to get the official stamp of approval from the lender.
Even better, you’ll receive personalized service from a member of the Auto Approve team to ensure you choose a loan that works for your needs and budget.
6. Apply For Refinancing
Once you’ve selected the most suitable lender for your financial situation, submit a formal application. If the loan application is complete and all the requested documents back up the entries, your new motorcycle loan could be finalized the same day.
Motorcycle Refinancing FAQs
Here are some frequently asked questions regarding motorcycle refinancing.
Some lenders approve and finalize motorcycle refinancing transactions on the same day.
Yes, it’s possible to get cash out of your motorcycle’s equity if you sell it for more than it’s worth.
It depends on the lender. Some assess loan application or origination fees. You could also be responsible for prepayment penalties with your current lender if you refinance and pay your existing motorcycle loan early.
You’ll get a hard inquiry each time you apply for a motorcycle loan, which could drop your credit score by a few points. The good news is most credit-scoring models group all hard inquiries together if made within a 14-day window.
Motorcycle refinancing is available through select traditional banks, credit unions and online lenders. Consider using Auto Approve to find the most competitive auto loan options for you. You can get a quote in minutes on the site, and a commitment isn’t required if you don’t find a loan that works for you.
No, motorcycle loans are not auto loans.