Powersport Loans for Bad Credit

If your credit is less than stellar, you may think that buying the powersport vehicle of your dreams is out of reach. While it’s true that getting a loan with poor credit can be more expensive, there are ATV financing for bad credit options available. Not only is financing possible, but getting an installment loan, such as vehicle financing, can actually improve your credit score if you make all of your payments on time.

Bad credit ATV loan options

Many powersport loans are a type of unsecured loan, also known as a personal loan. Personal loans can be used for a wide variety of purposes, from consolidating credit card debt to paying for an ATV or powersport vehicle. While there are a lot of personal loan lenders out there, here are a few options to begin your search.

You won’t know the exact terms you qualify for until you apply. You can use an ATV loan calculator to see what your payment may be for different ATVs, UTVs and other powersport vehicles.

Other lenders that offer bad credit ATV loans

Banks and credit unions

If you already have an account with a bank or credit union, getting a loan from them may be a convenient option. You could get preapproved for a loan before you shop so you know how much you can afford.

Though banks and credit unions are very similar, a personal loan from a credit union may offer lower fees and preferential terms because they are member-owned and focus on building long-term relationships with customers.

Manufacturers

Some manufacturers have their own finance companies, while others partner with a bank or other lender. Dealership financing uses the vehicle as collateral. If you miss payments, the lender can repossess the vehicle. The good news is that approval requirements are often less strict because the collateral protects the lender.

Dealerships

While dealerships can be a good place to get a loan because it is motivated to make a sale, be sure to shop around before you sign. “Buy here, pay here” dealerships tend to charge extremely high interest rates and should be avoided when possible.

Online lenders

The advantage of online lending is that you can often get an idea of the interest rate and loan terms you may qualify for in just minutes. You can get prequalified for a loan, even before you know which vehicle you want to buy. If a dealer or other lender can beat your prequalified rate, you can feel confident that you’re getting a good deal.

Qualifying for a powersport loan with bad credit

Generally, it can be tough to qualify for a powersport loan if your credit needs work. Your credit score is an important factor in determining your overall creditworthiness, so if you have a low score, lenders may view you as a risky borrower.

The first thing that most potential lenders do when reviewing your application is to pull your credit report. Lenders also look at your income and will typically require pay stubs or tax returns to verify that you can afford to repay a loan. If too much of your income is already committed to debt payments, that can be a red flag.

Increasing your chances of loan approval

Getting a loan, especially with low interest rates, is easier if you have a good score. But even if your score needs work, you may be able to put lenders’ minds at ease by demonstrating your creditworthiness in other ways.

Make a down payment

A substantial down payment can help you get a loan. In the eyes of a lender, the more you put down on a vehicle, the less likely you may be to default because you have more skin in the game.

Apply for a secured loan

A lender might be more willing to approve you for a secured loan. If you fall behind on the payments, the lender is entitled to repossess the vehicle. The lender can then sell the vehicle to pay off your loan and other expenses. The opportunity to recoup their losses through repossession lowers the risk they incur, so they may be more willing to lend to a borrower with poor credit.

Improve your credit Score

Another option is to work on improving your credit score before you apply. Make your payments on time and carefully monitor your credit report for problems or errors. Reduce your debt-to-income ratio by paying down your debts. As you build a solid history of on-time payments, your score should slowly improve. With a higher score, you can more easily qualify for financing with better rates.

How to budget for a bad credit powersport loan

The sticker price on your next powersport vehicle is not the only thing to consider when creating a budget. You’ll also need to account for insurance, taxes and fuel. Here are some important expenses to include in your powersport budget:

Purchase price

Costs can vary considerably among models and years of powersport vehicles, but here’s an idea of how much you may need to spend to buy each major type. Keep in mind that buying used could save you 50% or more off the new price tag.

• Motorcycles: Prices for motorcycles can vary widely based on make/model, age and extras. At the top end, you can expect to pay about $20,000 for a new 2022 Harley Davidson cruiser. If you’re on a tight budget, a used 2005 Yamaha cruiser may cost as little as $800. This motorcycle loan calculator can help you calculate possible monthly payments.
• All-terrain vehicles (ATV): A new ATV can cost about $8,000 for an average, 450CC model. The price can be higher or lower depending on the level of power and any extra bells and whistles.
• Snowmobiles: New snowmobiles can be much more expensive (starting around $15,000), but both ATVs and snowmobiles depreciate rapidly. You can find used ones for less than $2,000.
• Personal watercraft: For a new, high-end personal watercraft, you could spend over $30,000. If you’re happy with a more compact, used, “rec-lite” model, you can get one for less than $5,000. Here’s specific advice on jet ski financing.

Licensing, insurance and safety gear

State laws vary, but you generally need a driver’s license to operate a powersport vehicle. Some states may require special training, licenses, insurance and safety gear, such as a motorcycle helmet for ATVs or life jackets for jet skis.

Transportation

You’ll need a way to transport your vehicle to your off-road location, which means you may be shopping for a new pickup truck and trailer. A trailer might cost anywhere from a few hundred dollars on Craigslist to more than $4,000 from a dealer.

Fuel and maintenance

Fuel may be one of the first expenses you think of, but it can actually turn out to be one of the least consequential. Powersport vehicles tend to be very frugal on fuel. However, regular maintenance and repairs could add up. Talk to the seller, review the manufacturer’s website and do a Google search to find out what you can expect to spend for your specific powersport vehicle.

Taxes

Taxes are a necessary part of purchasing a vehicle of any type in most states, though tax rates will vary by state. You could pay less than 2% in tax in Alaska or nearly 10% in Tennessee. When budgeting for your powersport vehicle, look up the sales and personal property tax rates in your state.

Loan costs

Bad credit ATV loans and other powersport loans could have high APRs and origination fees. The best way to estimate this cost is to get preapproved so you know what rates you qualify for. An origination fee can be as high as 10% of the total loan cost, and APRs for bad credit borrowers can commonly be higher than 40%.

Is a bad credit ATV loan worth it?

Powersport vehicles are popular because they represent freedom and thrills in the great outdoors. Financing a powersport vehicle, even if your credit is less than excellent, isn’t necessarily a bad decision. Plan your purchase, make sure you can afford the payments and then always make your payments on time.

To save even more on interest, make extra payments on your powersport loan and pay it off early. You’ll enjoy your powersport vehicle even more when it’s all paid off.