How to Get Bad Credit ATV Financing
Over one-third of Americans and Canadians have a poor credit score. Because poor credit can cause high-interest rates and loan denials, many people think financing options are out of reach.
The same goes for outdoor enthusiasts looking to add to their collection of toys. They think bad credit ATV financing is impossible to obtain, so they never try.
Unfortunately for them, that’s incorrect. However, you can learn from their misunderstandings!
Before discussing your bad credit ATV financing options, let’s determine what constitutes a poor score.
What is Bad Credit?
Understanding your credit score is the first step in evaluating your financing situation. The current credit score range is 300 to 850. An excellent credit score falls at 720 or above, while 600 is considered the beginning of the poor score spectrum.
Obviously, the lower your score falls, the more likely you are to suffer hiked interest rates or denial. If you’re applying jointly, both scores will be taken into account.
Causes of Bad Credit
So what causes bad credit, anyway?
Making late payments or falling far behind can negatively impact your credit score. For many people, the culprit comes in the form of credit card debt, and once credit drops, it can be challenging to rebuild.
In some cases, debts unknown to the individual, such as old phone bills, are reported to collections and can drag down a credit score.
In rare scenarios, credit can be destroyed through cases of identity theft. It’s essential to closely monitor your credit report and dispute any discrepancies as soon as they arise.
Other circumstances that can hurt your score are:
- Foreclosures
- Bankruptcy
- Judgments
- Charge-offs
Bad Credit ATV Financing Options
If your score does fall in the poor range or you’ve suffered one or more of the above circumstances, no need to stop reading.
Financing options exist to help you purchase your dream ride. Many of these bad credit ATV financing options can be combined to improve your odds of approval and get you riding sooner.
Let’s start with the primary categories of financing options – off-site versus in-house.
Bank vs In-House Financing
In-house financing is an option in which the loan comes directly from the ATV dealer. By eliminating the bank or private lender’s restrictions, the dealer has more flexibility to work with your situation.
In other words, the dealer can lend to individuals with much lower scores than a bank would typically deny.
Further, in-house ATV financing means the dealer can spread your payments over a longer time-frame, increasing your ability to make each payment successfully.
Some may be willing to offer payment plans outside of the traditional monthly schedule. For example, some buyers find it easier to make smaller, weekly payments. Off-site lenders would not have the freedom to negotiate to this extent.
In-house financing can also save you in transactions and other administrative fees related to off-site financing.
Get a Qualified Co-Signer
Another way to mitigate the effects of bad credit is to get a co-signer on loan. By adding a party with a good credit history, lenders are more likely to approve your loan with a higher assurance they’ll receive payment.
Don’t be surprised, however, if people are not as willing as you expect to help. Because co-signers take on full responsibility for the loan if the primary borrower defaults, many are understandably hesitant to agree.
Get a ‘Personal’ Loan
One step further than a co-signer, a loan from a friend or family member is a bad credit ATV financing option for some. While it’s not advised to beg family for money, there’s potential to work out a personal payment plan.
Maybe you can do some extra convincing by agreeing to share your new ATV? Just a thought.
Consider a Trade-In
While not exactly a bad credit ATV financing option itself, consider a trade-in. By taking some of the principal costs off the top, your loan amount will be less and more likely to be approved.
Additionally, trading in an ATV that you still owe on will eliminate that payment, freeing you up for your new ATV commitment.
Save for a Down Payment
Similar to the trade-in concept, providing a larger down payment not only takes a chunk away from the required loan amount, but it proves to lenders you have the saving ability.
In extreme cases, you can consider saving up for the entirety of the purchase and skip financing altogether!
Check for Layaway Options
Some dealers offer layaway in place of a true financing option and are a particularly good choice for patient buyers.
In a layaway set-up, you won’t take your ATV home until it’s fully paid for. However, unlike financing, no interest is charged. In certain circumstances, buyers are even allowed to make payments on their own schedule.
This option is best for those who exhaust their options and cannot get a loan or are not yet ready to take the risk of hurting their own credit score. In other words, it could be considered a trial for truly financed payments.
Have Good References Handy
Whether you’re using in-house or off-site financing, the application may ask for references.
Providing a list of reputable individuals who can vouch for your dependability improves your approval odds. However, it likely won’t affect your interest rate.
Additionally, unlike co-signing a loan, serving as a reference carries no financial liability, so people are usually more comfortable participating.
Who Should Be My References?
Most lenders like a balance of professional and personal references. Reach out to a supervisor or valued co-worker to vouch for your work dependability, while listing a long-time friend as a character reference.
Regardless of whom you choose, references should be able to answer the necessary details about you, including your place of employment and address.
Ask About Automatic Payment Benefits
Some dealers, particularly those with in-house financing, are more apt to approve bad credit ATV financing agreements when the buyer can submit to automatic drafts.
By guaranteeing monthly payments on time, the lender is taking on far less risk. Buyers should beware; however, as insufficient funds and other penalties in these situations can be especially harsh.
Look out for Low Credit Promotions
A less common option, you should remain alert for dealers who host promotions for low credit buyers. These promotions are more likely with in-house financing providers who are willing to take on the additional risk and work with poor scores.
What about no credit?
If you’re young or have never opened a line of credit, lenders may be hesitant to approve you or require a co-signer. These same bad credit ATV financing options are also good for you.
However, always be careful when first taking on loans. Because it’s extremely difficult to rebuilt bad credit, you want to make sure you can handle the financial obligation.
Rebuilding Bad Credit
You may choose to take steps to rebuild credit before officially applying for bad credit ATV financing. Just know this will take some time and effort on your part.
For starters, fully pay off any overdue balances as quickly as possible. Then, be sure to make timely payments in the future.
Next, consider a secured credit card designed to assist in credit rebuilding. Most banks offer at least one option. Financial professionals advise against other card types, such as department stores, even if they are easy to obtain.
Finally, any time you can take out a smaller, private loan for any purpose and pay it off appropriately, your credit score will slightly improve.
So, What Are the Next Steps?
If you’re convinced that bad credit ATV financing exists, your next step is to explore which of the above options work for you.
As mentioned, you can combine the options for the highest chance of approval. For example, you can save for a large down payment, trade-in and older model ATV, and add a co-signer.
Even if you need some time to save to purchase that ATV for sale you have been eying up, you can begin shopping around for the ATV that you want so you’re prepared for the final cost. Be sure to take into account additional parts and service agreements that may be available for purchase.
Once you’ve established your financing route and accumulated any down payment, it’s time to contact a trusted dealer. Be sure to start with those offering in-house financing!
Of course, do your research to ensure they offer the model and any accessories you fell in love with!
During your conversation with the dealer’s financing representative, there are some important questions to keep in mind:
- How often are my payments due?
- What penalties are in place for late payments?
- Can I enroll in automatic payments?
- Is there a penalty if I pay off the loan early?
Once all of your questions have been answered, it’s finally time to apply for financing with the guidance of the representative. Because it’s all done in-house, you should be able to get a quick result.
After everything’s been processed, it’s time to hit the trails in your new ATV!
Have experience with other financing options not listed? Leave a comment, so others have full access to bad credit ATV financing advice!