Things to Know About a Powersport Loan for Bad Credit

Kerry Vetter
by Kerry Vetter
Updated: July 15, 2022

Have you ever dreamed about having a personal watercraft, jet ski, or any other powersport vehicle? Just imagine how great it would be to cruise some picturesque scapes on your new powersport enjoying a great time.

There are now many options of how to make this dream a reality you can afford. If you do not have enough funds in your savings account or don’t want to pay out-of-pocket in one large payment, powersport loans may be the right financial solution.

However, people with “subprime” credit scores often face some problems when trying to get a loan. The good news is that lenders now offer various options at competitive rates, even for people with poor credit scores. Let’s find out what ways of powersports vehicles financing are available for bad credit.

Table of Contents

What Is a Powersport Loan?
How Do Powersport Loans Work?
What Are The Best Bad Credit ATV Loans?
Where to Apply for Powersport Loans?
How to Qualify for a Powersport Loan for Bad Credit?
Available Alternatives of Powersport Financing

What Is a Powersport Loan?

Powersports financing is one of the most popular ways of purchasing powersports vehicles. Powersport lending is a type of vehicle financing that allows you to borrow funds to purchase off-road vehicles, jet skis, dirt bikes, personal watercrafts, an ATV, UTV, or any other powersport vehicle.

They are similar to car or recreation vehicle loans. You will get the loan amount equal to your powersports vehicle purchase price and bind yourself to repay it within a chosen period of time.

powersport loans for bike with bad credit score

How Do Powersport Loans Work?

The exact specifics of any powersport loan usually depend on the lender. However, ATVs financing generally works almost like any other vehicle cash advance. First, the lender that gives you a credit approval provides you with the amount you need to buy a new or used vehicle. Next, you must repay the whole loan cost in monthly installments within an agreed-upon period that is called a loan term.

A monthly payment you must make is usually predictable. Most lenders offer loans with equal monthly payments. Let’s see how it works. Your total loan cost consists of the initial loan amount plus interest rate, sales tax, registration fees, and any other additional charges. This amount will be equally divided by the number of months of the repayment period. Loan terms are usually long and may reach 84 months.

What Are The Best Bad Credit ATV Loans?

Many powersport vehicle loans are a type of personal loan. They are unsecured and have no restriction on what you can spend the funds for. A lender, such as a bank, credit union, or other financial institution, may offer you an option to finance or refinance your vehicle.

They typically have a maximum loan amount of up to $50,000 at an annual percentage rate from 4.5% to 35.99%, depending on your credit score. In some cases, your rate may be subject to change, while other lenders may offer you fixed rates and predictable payments.

Traditional financial institutions usually offer terms from 36 to 84 months. Most of them have preapplication to help you estimate what amount and conditions they may offer you. You can also use a lender’s powersport loan calculator to see an estimated monthly payment and decide if it is acceptable to you.

Note: When you use a handy calculator, you must specify an estimated purchase price. Don’t forget to include the cost of your protective gear, such as helmets, gloves, or any other equipment you may need, as well as the cost of registration fees and sales tax.

Applying through a dealership is also a popular option to finance a powersport vehicle. There are various official dealers and manufacturers that may help you purchase specific vehicles they sell. A dealer may offer you a side-by-side loan, off-road vehicles, motorcycle, PWS, or snowmobile financing, as well as motorcycle and snowmobile loan consolidation.

People usually think dealers offer lower rates and better terms, but it is not always the case. You should compare different offers before applying for a loan, whether you’re going to apply through a dealership or a bank.

powersport financing

Where to Apply for Powersport Loans?

If you’re looking for some ATV financing near me but don’t know where to start, here are some available powersports lenders that may offer bad credit ATV loans.

Banks and Credit Unions

Traditional lenders, such as banks and credit unions, often offer preferential options to their current clients and members. That is why applying for a loan in your bank or credit union may be convenient. It also allows you to get preapproved and discover the loan amount you can borrow before you go shopping.

Both banks and credit unions are traditional financial institutions that operate very similarly. They typically check your credit report and the overall credit worthiness to make a loan decision, even if they offer powersport loans for bad credit. At the same time, a credit union is a nonprofit organization owned by its members, so it may offer you lower ATV loans rates.

Dealerships

Most people consider a dealership a good place to get a loan without a third party. However, all dealerships are interested in making a sale. That is why you should ensure you compare the offers and choose the best among all the loan options before you get credit approval and sign a loan contract.

If you just succumb to the advertising that says “buy here,” “pay here,” or “vehicle sales,” you may get a loan at extremely high rates, so your vehicle will be overpriced. And if you have a bad credit score, dealerships may offer you an annual percentage rate as high as 25%.

Manufacturers

Many manufacturers partner with banks and various lending companies, while others have their own financial services. This type of powersport vehicle financing uses the vehicle as a pledge. It is good in terms of conditions and requirements you must meet to get a loan because they are usually simplified. But remember that if you miss your monthly payments, your vehicle may be confiscated by the lender.

Online Lenders

Prequalifying for a loan from an online lender or lending company allows you to understand what loan amount and interest rates you can get. You don’t even need to decide on a specific vehicle to take a closer look at the conditions a lender can offer. Online lenders usually have no obligation and fees for pre-applying. It means that your preapplication does not oblige you to do business with an online lender if a bank or a dealer will offer you a better deal.

How to Qualify for a Powersport Loan for Bad Credit?

The exact requirements for getting powersport loans may vary from lender to lender. However, there are some common steps you must take and general criteria you must meet to be eligible for getting this type of borrowing.

Once you decide on the vehicle, the process of obtaining a loan starts with preapplication. Depending on the lender, you can save time and fill out a simple form to apply online or visit their branch office.

After getting a prequalified credit decision, you can see the amount of your future loan payment and a loan amount to compare it to other offers. Once you decide on the loan, you can test-drive the vehicle in a local dealership using your prequalified credit offer. Finally, you can get the funds to purchase the chosen vehicle.

To qualify for a loan, you must be an adult resident of the US with a valid ID and active bank account. You must also verify your income and creditworthiness. In some cases, the lender may require you to provide it with collateral or some additional documents.

powersport loan with bad credit

Available Alternatives of Powersport Financing

P2P Lending

In some cases, you can borrow the amount you need from your family member or friend if you are in a good and close relationship. This option can save your money because it usually doesn’t have any interest rates, fees, or charges (unless otherwise agreed).

Your relatives or friends also don’t make a decision relying on your credit score. Yet, the loan amount may be pretty high, so not everyone can have the necessary sum and be able to lend it to you for a convenient period. But still, consider this option first but make sure you will be able to turn back the money on time.

Home Equity Lines of Credit

HELOCs allow you to get a part of your home’s value and use the funds for almost any purpose. It’s like a second mortgage that can be a key to your new ATV financing. However, a HELOC can lead to owing more than your house is worth. One day you may lose your property if you face some financial problems and will not be able to make payments on time.

Credit Cards

You can use your credit card to pay your vehicle purchase price if you have a high enough limit. As credit cards generally offer some reward points for your purchases, they may also be a beneficial option. But first, make sure you will be able to pay the whole amount off on time to avoid late fees, high interests, and bad track records on your credit report. In some cases, it may be very risky and lead to further credit score damage.

Kerry Vetter is a consumer finance expert and writer, who has been engaged in creating finance-related content for more than ten years. Her expertise is approved by obtaining a Bachelor of Science in Finance from Boston College, as well as receiving three major certificates as a professional advisor and counselor.  At the moment, Kerry is an author of multiple educational articles and insights that have been created in order to increase and develop financial literacy and responsible borrowing among US citizens. Her expert relevant savings advice has helped a lot of people overcome their financial issues and find out more about principles of smart spending, the right investment decisions, and budgeting.  You can read more about Kerry’s professional background here.

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