Motorcycle Title Loans -What Are They and How Do They Work?
Motorcycle title loans are becoming more common as people realize that having equity in their motorcycle enables them to get a secured loan. With a motorcycle title loan, you are using the equity in your motorbike or motorcycle to get cash from a licensed lender in your state. Similar to what you see with a car title loan, nearly all loan companies allow you to keep riding the motorcycle for the entire loan term. Most lenders will underwrite two different types of motorcycle title loans. The first option is where an applicant takes out a loan with the expectation of paying it off in one lump sum. The other more common type of title loan is where someone makes set monthly payments to pay off the amount borrowed
How To Get A Motorcycle Title Loan And How Much Can I borrow
The information required by a lender for a motorcycle title loan is surprisingly similar to what you would need for a car title loan. You will need to provide your driver’s license and your social security information. Some title loan companies will also need your employment history and relevant salary information as a way to formulate your expected monthly payments and loan amount. The most important requirement for a motorcycle title loan is your pink slip. Anyone who owns a motorcycle outright should be able to provide the title to a lender as collateral for the loan. A typical lender will offer you cash that equals 40-60% of the value of your motorcycle. The amounts vary for each situation, but total loan amounts will often be much smaller than your average car title loan online, falling into the range of $2,000 to $4,000.
What are the interest rates and fees with Motorcycle Title Loans?
Along with a high interest rate that you would expect with any type of title loan, you also need to contend with late fees and sometimes prepayment penalties if you want to pay off the loan early. This type of loan will work very well if you are able to pay the full amount of the loan upfront, but that is not usually the case. Similar to the lower loan amounts we see with boat title loans versus auto equity loans, most people are not able to pay off a motorcycle title loan in one lump sum. This is why the interest rates are so high and why you should only use this as a short term source of financing. Besides the rates and fees, you also need to contend with the risk of losing your motorcycle to repossession if you miss payments or fall behind. Each state has specific lending laws and restrictions in the books that give you some leeway, but you don’t want to fall behind on a motorcycle title loan.
Does it ever make sense to take out a title loan on my motorcycle?
Before you take out a motorcycle title loan, it would behoove you to look into your financial situation and see if yourself if you even need one in the first place. Most types of online title loans are easy to get and you can access cash within one business day. The process is even quicker for someone who wants to apply for a motorbike or car title loan near me. But again, make the right decision on whether you want to hand over the pink slip for a motorcycle title loan.