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It can be a difficult task to own a motorcycle. Most of this responsibility is related to finances, particularly if the loan was taken out by a bank to buy the motorcycle.
As we all know, life is unpredictable and finances can sometimes be difficult. This means that unnecessary expenses like monthly payments for a motorbike are often put off the agenda. Unfortunately, that can eventually lead to other problems if you don’t take the right steps to address it.
Can a motorcycle be repossessed If you borrowed money from a bank to buy the motorcycle, and then start to default on payments, it is possible to have the motorcycle repossessed. Because they technically own the title, the bank can repossess it.
Having your belongings taken away from you isn’t necessarily a pleasant experience. Having to sell such items because you’re in a financial crunch isn’t fun either. I’ve been able to compile a guide that can help you navigate through possible motorcycle repossession and explain the best options you have.
The Process of Motorcycle Repossession
In the last decade, banks have been a great tool to help people get by. Without loans from banks, a lot of us wouldn’t have cars and most of us certainly wouldn’t have a house.
It is now possible to purchase additional vehicles through banks, which has been a great blessing. Many people love motorcycles and banks make it possible for them to buy the bike of their dreams.
Sometimes, however, dreams can be destroyed when finances are tight or life changes are made. Motorcycles are amazing to have, but they’re not an essential need when it comes down to simply surviving and trying to put food on the table for you and/or your family.
The process of repossession begins when someone who has borrowed money from a bank to buy a motorcycle and stops making their payments either because they forget or they simply can’t afford it.
The bank technically has the right to repossess the vehicle after one missed payment. However, they are usually unable to afford repossession so they wait a few months for missed payments before taking any action. While some banks may require the borrower to pay for repossession, each bank is unique.
The bank might contact you by email or phone to inform you of repossession after a few missed payments. If there is no reply from the buyer, the bank will then take it a step further and hire a towing company that specializes in repossessions to physically go to the borrower’s place of residence and attempt to repossess the motorcycle.
Towing companies and banks are now permitted to enter private property, such as inside a home/apartment or garage, without permission. However, they can only repossess motorcycles left in their driveways as they aren’t technically allowed to enter any building.
Once the bank takes possession of the motorcycle, it will be sold to an auction in order to recover any money they have lost. Usually motorcycles sell less than what they’re worth at auctions. If the motorcycle goes under the amount owed, The difference is still owed to the borrower. This is deficiency equilibrium.
If the borrower is still owing money on a balance due but does not pay the required payments, the bank can sue him to recover the money. Even though not every bank will do this, particularly if the amount owed is low, they still have the right.
What a Repossession Does to You
You may be a victim of a motorcycle that has been repossessed or fear you might become one. There are some effects it could have on you. The first one can have an emotional effect. It’s a pretty degrading feeling knowing you had to have something taken away from you because you couldn’t make the payments.
A motorcycle was bought for more than that. It can be very difficult to lose something like that.
Apart from the emotional impactA motorcycle being repossessed can also have a major impact on your credit score. If a bank has to take the effort to repossess a motorcycle that you weren’t willing to negotiate on, your credit score will dramatically decrease. And if you’ve used the bank to borrow money for one purchase, chances are you’ll need to rely on them again for future purchases.
A motorcycle repossession is recorded on a credit card for seven years. The record will show as soon as the loan has been claimed delinquent. That is, when you stop making payments. Seven years is a long time when you’re trying to get future loans.
Even if the motorcycle is repossessed, you’ll still owe money for the motorbike even after seven years. For any unpaid balance, the bank can still come after you.
What about Voluntary Repossessions?
There are literally millions upon millions of situations and scenarios that motorcycle owners can find themselves in when they want their motorcycle repossessed. It doesn’t have to come down to the bank hiring a towing company to come and get your motorcycle. You can actually voluntarily take your motorcycle in to the bank if you know you can’t make any more payments. This is called voluntary repossession.
An informal way to negotiate your inability or unwillingness to pay is voluntary repossession. Although it will still be visible on your credit score and credit report, the impact will be much smaller since it was voluntary taken in.
You will be able to borrow more money from the bank in the future, which is a plus. Remember that even if you are unable to make the payments, you still have to pay any remaining balance after the bank has sold it or auctioned it.
How to Prevent your Motorcycle from Being Repossessed
A motorcycle repossession is an unpleasant experience and if you’ve been through one, you probably don’t want to every do it again. There are ways to avoid this happening again.
I’m not going to tell you how to trick to bank or cheat your way out of paying the balance. You have signed a contract to pay off the balance. Anything else is dishonest.
Let me now give you some tips to help you avoid this. The first suggestion is to only buy a motorcycle with cash and simply don’t involve a bank at all.
Motorbikes should not be considered your main means of transport. This will save you money and allow you to sell it if you are in financial trouble.
Never buy a new motorcycle at a dealership if you are struggling financially. When you buy a brand new motorcycle, you lose an average of 11% of it’s value the second you ride it off of the parking lot. That’s a lot of fluff money you’re giving.
You can let someone else take care of the depreciation, and you can buy a used bike. The final cost will be much lower. For more information on buying a used motorcycle vs a brand new one, click here
If you find yourself in financial difficulties and cannot afford to pay for the motorcycle payments, don’t wait for it to become delinquent before you do something about it. You can legally sell a motorcycle if you have a loan. I don’t recommend that you sell the motorcycle without the title and then run. It is illegal.
Once you find that you can’t make the payments, talk with your bank and let them know you are going to sell your motorcycle. It is possible that the motorcycle will be worth what you owe. After you have found a buyer interested, you’ll both go to the bank together. The loan will be paid off, and the title will be given the new owner.
A buyer interested in buying the motorcycle can also get a loan from their bank. In this case, banks would collaborate and transfer the money.
Talk with your bank to determine if your motorcycle is worth less than what you owe. Imagine your motorcycle is valued at $6,500, but you owe $78,800. You find a buyer who will pay $6,500.
A personal loan may be offered by the bank for $1,300. This will allow you to purchase the motorcycle and pay off any remaining balance. This would be a refinance, and your monthly payment would be lower for a $1300 loan rather than a $7800 loan.
Is it possible for a repossessed bike to affect the credit rating of a cosigner? If you have a co-signer on your loan and you default on that loan, your co-signer’s credit will also be affected. A co-signer is obligated, by signing a contract, to help make the payments if the initial borrower isn’t able to make said payments so they are also held reliable.
Is it possible to get your motorcycle back, if it has been repossessed? If your motorcycle is repossessed, it is possible to get it back. Before the bank sells your motorcycle at an auction, you will have to pay the full amount and the repossession fees.