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Can You Refinance Your Motorcycle Loan?

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Sure, you’ve probably heard a car loan can be refinanced, but what about a motorcycle loan? The short answer is yes, you can refinance your motorcycle loan. But there are plenty of aspects to consider before you apply.

Let’s first start off by asking one simple question: Why do you want to refinance? Maybe your current monthly payments are high. You may be able to save money if you’re able to refinance to a lower annual percentage rate (APR). A lower APR might be a good reason to refinance, but you also might need to lower your payments, which can be done by refinancing for a longer term. However, the downside of a longer term is that you’re paying more in interest over the life of the loan.

No matter your reason, refinancing a motorcycle loan may be a good option for anyone with a with a solid credit history and a bike that has a higher value than what’s owed on the loan. It may be possible to refinance a motorcycle loan with bad credit, but you’ll most likely pay high interest rates. Whatever your credit situation, it’s important to make sure your new loan really is an improvement over the old one.

How to refinance a motorcycle loan

Refinancing any type of vehicle loan may seem overwhelming, but the overall process doesn’t have to be with the proper preparation. Take some time to ask yourself a few questions to determine whether refinancing may be a good option for your individual needs. A few things to think about when getting started are: Can I lower the cost of my motorcycle financing? If so, by how much? How much will it cost to refinance a motorcycle loan and will the actual process be time-consuming?

After you have given those questions some thought, you can help you determine if refinancing is, in fact, the right option for you by asking a few other questions: Will I get a better rate than the one I have now? What is my credit score, and has it improved or stayed the same since I first financed my bike?

Once you consider all of these questions, you can then consider the process behind refinancing, such as whether the application can be done online or in person, how long it will take to get approved, and if there are any fees associated with refinancing, including an application fee. In addition, you may also need to pay a fee to your county or state department of motor vehicles for a new title on the bike with the name of your new lender. Remember, when you refinance, your current motorcycle loan is paid off completely and you are left with a brand new loan.

So, you’ve given refinancing a lot of thought. Now what? It may be time to figure out how to go about actually refinancing your motorcycle loan. Here are a few tips to help get the ball rolling:

How much will you need? One of the best ways to begin is by determining how much you still owe on your bike loan so you’ll know how much you’ll need to refinance. If you don’t know the amount, you can simply call your current loan provider and it can provide that information to you.

Shop around to find your best rate. When you know how much you need to borrow, you can then compare rates, finding the best one to fit your financial needs. Rates vary by lender and can depend on the loan term and your credit score. Each lender may have its own minimum credit score requirements when it comes to applying to refinance your loan. For example, the online lender LightStream requires a borrower to have at least a 660 credit score in order to qualify. In general, the higher your credit score, the better the rate. You could fill out a single online form at LendingTree where you may receive several different loan offers from lenders, depending on your creditworthiness.

Use online tools. There are many online tools to help with your financial planning. One of these tools can be a refinance calculator. Here, you can enter in a few simple details, including your credit score, loan amount and the loan term. These results will help you compare with your current loan to determine if refinancing may be a cheaper option.

Know the impact on your credit. When you apply for refinancing, lenders will require a hard inquiry on your credit. A hard credit can temporarily lower your score, something to remember when applying to refinance. However, multiple applications for a loan won’t have any more of an impact than a single application if done within a certain timeframe (usually within 30 days, according to FICO, which created the commonly-used credit score).

Watch out for possible fees. A lender can slap on certain fees, which can include an application fee. These fees can vary depending on each lender but can be costly, especially if you are not currently a customer with that particular bank. It’s best to always ask any potential lender if they charge any fees.

Get your documents together. Yes, you’ll need to know what your current loan balance is, but you’ll likely need to know a few things pertaining specifically to your motorcycle, such as its vehicle identification number, along with the make and model, the value of your bike, and your bike’s insurance information. You can look up your bike’s value using a tool like Kelley Blue Book.

Complete your application. When you have all your documents ready and have found a lender you’d like to work with, you’ll begin your application. Many lenders offer online applications that are quick and easy to complete, while providing you with a fast response to whether you qualify or not. It’s important to complete the application accurately, providing all the original information used on your current loan to  help determine your identity along with your rates and terms.

Pay off your old loan. When you refinance, you are paying off your current loan by using the money you receive from your new loan. Once you pay off your old loan, you will then begin paying monthly payments on the new one. Some lenders will pay off the old loan for you, though others may deposit your new loan into your bank account and allow you to pay it.

How do you find lenders that refinance motorcycle loans?

You may want to first look to your own credit union, bank or online lender. It may be possible to refinance with your current lender, but some banks will not refinance their own loans. Many lenders that offer motorcycle loans also tend to offer to refinance loans. If it’s not clear what they offer on their website, call them directly. A few institutions that offer refinancing options on motorcycle loans include SunTrust, Westlake Financial, Farm Bureau Bank and Hudson Valley Federal Credit Union.

Loan requirements, such as amounts and terms, can vary with each lender, but many tend to require a minimum loan amount before they will consider you for a motorcycle refinance. We’ve seen minimum requirements of $5,000, such as with Lightstream and Farm Bureau Bank. Loan terms may have minimums, and even maximums, as well — for example, terms for the aforementioned Lightstream and Farm Bureau Bank begin at 24 months, while Hudson Valley Federal Credit Union motorcycle loans cannot exceed an 84-month term.

Lenders not only look at your current loan, they will take a look at you, the borrower. While each lender has its own qualifications for refinancing a motorcycle loan, most of them take your credit history into consideration, paying close attention to your score. If you have good credit, or if your score has gone up since you first took on your motorcycle loan, you’re likely in good shape. However, if your score is still on the lower end, you may want to work on improving it before applying to refinance your loan. Still, there are some credit unions that have more lenient credit requirements, or even none at all.

The bottom line

Refinancing a current motorcycle loan can be a good option for someone who wants to save money. There are several financial institutions that offer refinance options that can provide you with lower rates and lower monthly payment options. However, it’s important to remember that your credit history will play a key role in determining whether you qualify to refinance your current motorcycle loan — if you don’t have great credit, refinancing may not be an option.

Keep a close eye on your credit history and always shop around with various lenders to find your best rates and terms for your financial needs.

The information in this article is accurate as of the date of publishing. 

 

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