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You’ve had loads of fun with your motorcycle, but it’s time to let it go because you can no longer afford the monthly payments. The sooner you get rid of it, the better, because each month it stays is another month of covering monthly loan payments and insurance premiums.
When it comes to getting out of a motorcycle loan, most people either sell the bike, trade it in, refinance or modify the loan. Each option has unique advantages that make it ideal for specific circumstances. In this guide, we’ll break down how each option works and when it’s the right move for you.
The first step to getting rid of your financed motorcycle is verifying how much you still owe your lender. How much you owe will determine whether you’re upside down on your loan or have positive equity.
Being upside down (negative equity) means you owe more than your bike’s current value. Positive equity, on the other hand, means your bike is worth more than you owe. Knowing whether you have positive or negative equity is key to picking the best way to get rid of your financed motorcycle.
Here are your options for getting out of a motorcycle loan and when each makes financial sense:
Many people avoid buying a bike with a lien on it because the lender could repossess it if the loan isn’t paid off. Nonetheless, selling a financed motorcycle is still possible and often fetches a higher price than other ways of getting rid of it. That’s because, unlike dealerships, most private buyers aren’t looking to profit from the purchase and are willing to pay closer to market value.
Here’s how to sell your motorcycle with a loan:
If you’d like to replace your current financed bike with another one, trading it in is often the fastest method. A trade-in lets you put the value of your bike toward getting a replacement, reducing the cost of the new purchase.
However, the process works best if you have positive equity. Having positive equity means your bike’s trade-in value is higher than the loan balance. You can pay off the loan in full with that value and put the rest toward your vehicle purchase.
If you have negative equity, your bike’s trade-in value is less than the remaining loan balance. You can still trade it in, but you’ll need to either pay the difference out of pocket or roll the shortfall into your new loan. Rolling over the shortfall will increase your new loan amount, leading to higher monthly payments.
If you have enough saved up, you can pay off the loan yourself, which is the simplest way to get out of a motorcycle loan. Start by contacting your lender to request the payoff amount. Most lenders require this request in writing and provide a deadline to complete the payment.
Note that the payoff amount will be more than your remaining loan balance. It’ll also include accrued interest and applicable fees, such as early repayment penalties or administrative charges.
Once you’ve paid off the loan, you’ll have a clean title, making it easier to sell the bike at a higher price since there are no encumbrances. Selling also becomes more straightforward because you no longer have to coordinate with your lender to complete the sale and transfer the title. Alternatively, you could keep the bike since you now own it free and clear.
If you still love your bike and are just tired of costly monthly payments, you could keep your ride and get rid of the loan with motorcycle refinancing. This replaces your current motorcycle loan with one that offers better terms. It’s ideal for lowering your monthly payments or removing cosigners.
However, getting out of a motorcycle loan by refinancing is only possible if you can qualify for a new loan with better terms than your current one. You are more likely to qualify if you have good credit, proof of steady income and a history of making payments on time.
Another option, if the issue is your loan and not the motorcycle, is to discuss a loan modification or transfer with your lender. A loan modification involves communicating to your lender that you can’t afford the payments due to financial hardship. If you can prove this, your lender may reduce your interest rate or extend your loan term to lower your monthly payments.
A loan transfer, on the other hand, requires finding someone else to take over your motorcycle loan. Your lender may agree to this if the new borrower meets their credit and income requirements.
If all else fails and you can’t afford your payments, you can give up your motorcycle for voluntary repossession — handing over the bike to your lender instead of waiting for them to repossess it. Doing this early prevents collection calls, embarrassment and accumulating late fees.
However, voluntary surrender isn’t consequence-free. You may have to pay the difference between what you owed and what the sale brought in. Also, the repossession can damage your credit score even though it’s voluntary.
Picking the best way to get rid of your financed motorcycle requires first confirming how much you still owe, your motorcycle’s current value and your savings. With this information, you can decide whether selling, refinancing, modifying your loan or surrendering the bike is the way to go.
For instance, if your bike is worth more than what you owe, you could sell it, pay off the loan and possibly pocket some cash. But if you owe more than it’s worth, refinancing or a loan modification can help make your monthly payments more manageable. If you can’t pay off the loan, find a buyer or qualify for refinancing, you may need to voluntarily surrender the bike to get rid of it.
Here are answers to common questions about how to get rid of your financed motorcycle:
You can dispose of your too-expensive motorcycle by selling or trading it in. Alternatively, you could voluntarily surrender it to your lender, but unlike the other two choices, surrendering can hurt your credit and leave you owing money.
Yes, you can trade in a financed motorcycle for a cheaper one. The dealer will typically pay off your existing loan and apply any positive equity toward your new purchase. However, if you owe more than your current bike is worth, you may need to pay the difference or roll it into your new motorcycle loan.
Yes, you can refinance a Harley-Davidson motorcycle just like any other bike. You can do this to potentially get a better interest rate or adjust your loan term. Qualifying for refinancing requires meeting the lender’s eligibility requirements, such as credit score, income and loan-to-value ratio.
Yes, you can sometimes transfer your motorcycle loan to a willing party. However, the lender must approve the transfer, and the new borrower must meet the lender’s credit and income requirements to qualify for the loan.
Selling or trading in a financed motorcycle shouldn’t hurt your score, but a voluntary or involuntary repossession will, and it can impact your credit report for years.
Need to get rid of your financed motorcycle? Explore your options to sell, trade, or refinance — even if you still owe money on the loan.
