If you own a motorcycle or a scooter and you need some cash fast, you might consider getting a Bike Pawn Loan from a private finance company. In case you’re wondering what a Bike Pawn Loan is, we’ll cover all that in this article, as well as highlight some advantages regarding Pawn Loans, compared to trying to borrow the money from a bank.
What Is a Bike Pawn Loan?
In general, a Pawn Loan is a secured type of finance offered by a private lender. You offer up an item of value to the lender as security and they agree to loan you a certain amount, dependent on the value of that item.
As the name suggests, with a Bike Pawn Loan you are taking out a loan by using the value of your bike as collateral. The lender keeps your bike in their possession until you repay the borrowed amount, including interest and applicable fees, in full.
It’s a very simple transaction compared to trying to borrow unsecured funds through a bank or credit union. It works very similarly to the pawnbroker process, only you can generally borrow more money.
To find a private lender who offers Bike Pawn Loans near you, it’s as easy as jumping online and doing a bit of research. For example, simply search for ‘Bike Pawn Loans Sydney wide’ to pawn your motorbike in the Sydney CBD and surrounding areas.
How Much Can You Borrow?
Pawn Loans will usually be in the vicinity of $2,000 and can range up to $500,000.
How much you can borrow really depends on the value of the bike you have to pawn. Let’s say your motorcycle has a current market value of $20,000. As a general rule, the lender will offer you a maximum of 60% of the bike’s market value. So, in this case, the maximum amount you could borrow would be $12,000.
You also don’t want to over-borrow. Just because you can get a loan of $12K against your bike but you only need $3K, you shouldn’t resist taking out the extra $9K. This is because the interest rate on a Pawn Loan is a percentage of the total borrowed amount, so the more cash you borrow, the more interest you’ll need to repay.
Just borrow what you need and have a plan in mind as to how you are going to repay the debt.
Your Eligibility For a Bike Pawn Loan
One of the issues with getting finance from a bank or another lending institution is your credit score and track record of repaying debts plays a crucial part in the application process. If your score isn’t perfect, there’s a chance you could be rejected for a Personal Loan or even a Credit Card.
It’s the same if you’re currently out of work or only working part-time. Approach a bank for a loan when you’re unemployed and you’ll likely get a sympathetic, but firm, shake of the head from the bank manager.
However, with Pawn Loans – in this case, a Bike Pawn Loan – you are offering up your motorcycle as collateral against the borrowed amount. This means no credit checks and no employment checks are required. Because of this, private lenders are far more likely to say yes to a loan as they have your bike in their possession until you pay the money back. If you don’t pay the loan back, they keep your bike and sell it to recoup their lost funds. It’s just another form of secured lending.
Apart from having a bike that you own without any finance owing, you’ll also need to be over 18 and produce the motorbike’s registration papers when applying. The lender will also require 100 points of ID, which is standard in the finance industry.
Other Advantages of a Bike Pawn Loan
“Speed” is the biggest advantage in applying for a Pawn Loan. Most lenders can be very slow when it comes to appraising and approving or denying loan applications. Not so with a Pawn Loan. More often than not you’ll have the loan approved and the money in your bank account on the same day or very next business day.
If you need money in a hurry, with minimal paperwork and a very simple application process, then a Bike Pawn Loan just might be the best option for you.