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Motorcycle Loan: Do You Really Need It? Read to Know!

  • Auto Refinance
  • Natasha Young
  • 7 minutes

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Motorcycle fanatics, perhaps even more than car owners, have a strong emotional attachment to their motorcycles. Most of them can be expensive to a certain extent, and you might want to take a motorcycle loan for them. But you must make sure that you don’t fall prey to hefty monthly payments. Wondering how? Don’t worry; we gotcha! Learn more about how to make the most of a motorcycle loan.¬†

motorcycle loan

What is a motorcycle loan? 

Motorcycle loans are frequently secured loans, which means they must be backed up with collateral ‚Äď in this scenario, the motorcycle itself. If you get a secured loan, the lender may repossess your asset if you fail to make your payments. Secured and unsecured motorcycle loans are your available options in this case.¬†

If you’re worried about using your motorcycle as collateral for a loan, you might apply for an unsecured personal loan. However, lenders may see unsecured personal loans as a higher risk because they cannot seize your asset if you fail to meet the loan’s terms. As a result, unsecured loans often carry higher interest rates and may necessitate higher credit ratings for approval. Although, when you are searching for a motorcycle loan, you can explore options like:¬†

  • Hire purchase¬†
  • PCP- Personal Contract Purchase
  • Personal loan¬†

Financing a motorcycle is no different from financing a car. Whether you’re buying a car or a motorcycle, the purchase will most likely be costly. It might not be as pricey as a car, but it might still be financially unmanageable. ¬†

In both circumstances, the lender will run a credit check. If you have unmanageable credit card debt, consider waiting until it is paid off before purchasing a new bike. Excessive debt can lower your credit score, make you appear riskier to lenders, and ultimately force you to take a more expensive loan. 

How to finance your motorcycle 

Run a check on your credit score 

It’s always better to check your credit score before making a large purchase. Once a year, each of the three major credit bureaus provides consumers with a free credit report. Seeing your credit score at the outset of the procedure allows you to find any errors.¬†

Estimate your financial budget 

In general, the larger the down payment and the lesser the loan period, the less interest you’ll pay. However, it is critical that your monthly payment be manageable. You don’t want to miss payments and have your credit score suffer as a result, or else the motorcycle will be repossessed. If you can’t decide whether to make a larger or lesser payment, make the lower payment and pay more toward the loan principal when possible. ¬†

Decide on the vehicle you want to buy 

Motorcycle lenders will require specifics about the motorcycle you intend to finance. For example, you should give the lender the motorcycle’s mileage and vehicle identification number (VIN), which will tell the lender the year, make, and model.¬†

Consult different lenders 

Dealerships routinely exaggerate consumer auto loan APRs, so acquire a few quotes directly from lenders without going through an agent. Approaching different lenders for a motorcycle loan does not harm your credit score any more than applying to one does if you do it within a 14-day period. The credit bureaus in the United States offer this time so that consumers can rate shop without being penalized unreasonably. 

Carry out the paperwork 

Select the best-suited motorbike loan deal for you and complete the paperwork with your lender. If you buy a motorcycle via a dealership, the finance manager can help you navigate your lender, or the dealership finance manager will walk you through the paperwork. You could schedule your payments every two weeks to lower your interest payments further. 

Reference motorcycle rates 

Motorcycle loan rates 

Lender  Starting APR*  Terms (Months)  Type 
Digital Federal Credit Union (DCU)  3.50%  Up to 60 months  Secured loan 
USAA Bank  5.49%  Up to 72 months  Secured loan 
LightStream  5.24%  Up to 72 months  Unsecured loan 
Navy Federal Credit Union  6.95%  Up to 84 months  Secured loan 
Figure   5.75%  36 or 60 months  Unsecured loan 

* May require a certain loan amount and/or term; may include an auto-pay discount; may require membership 

How to qualify for a motorcycle loan 

Lenders will consider your credit score, down payment, and the value of the motorcycle when making a secured motorcycle loan. Lenders will look at your credit history when considering an unsecured loan. Either way, they will carefully assess whether you can afford to make the payments. Motorcycle loans for those with bad credit are accessible too. In short, if you have a decent credit score and a useful source of income, you are already qualified for a motorcycle loan.

motorcycle loan

Where to get a motorcycle loan from?

The best-case scenario for purchasing a motorcycle (or any significant purchase) is to wait until you have saved enough money. If you’re set on taking out a line of credit to buy a motorcycle, proceed with caution as you would with any other large purchase; make sure you understand the terms and can afford the payments.¬†

Dealerships 

Almost all motorcycle dealerships give their customers financing alternatives. They may be the most willing to work with you since they want to sell something but don’t anticipate the greatest pricing. When reading the terms of your loan agreement, take extra measures.¬†

Manufacturers 

Another potential source of funding is motorcycle manufacturers. As part of their sales promotion efforts, they may provide special financing schemes, particularly on unpopular or newly released models. Always inquire with your dealer about OEM (original equipment manufacturer) loans on the models you’re interested in. Please keep in mind that OEM financing options are only available for new motorcycles. These loans cannot be used to purchase a used bike.¬†

Banks and other online lending options 

A local bank or credit union is one of the most cost-effective venues to go for a loan. The available rates and conditions are virtually always better than those offered by other providers. In addition, there are internet lending choices in addition to traditional banks and credit unions.  

These are some of the feasible possibilities, but you must do your research. Investigate the lender to evaluate their credibility. Look for feedback from previous buyers. Also, other motorcycle financing options like motorcycle leasing, home equity loan, and peer-to-peer lending are worth experimenting with. 

What not to do when financing a motorcycle 

Signing up for a new loan when you can’t afford timely loan repayments¬†

You should never sign up for a motorcycle loan just to buy a motorcycle you cannot afford. If you have debts, it’s better to postpone your purchase until you have a better financial status.¬†

Using your credit card for the purchase   

This can be a tempting alternative if you have a large enough limit because it’s simple to set up and requires no credit check or additional paperwork. However, credit card debt typically has higher interest rates than other types of debt. You may face severe penalties if you fall behind on your high-interest payments.¬†

motorcycle loan

Bottom line  

Regardless of how much that dream bike tempts you, it would help if you never gave in to temptation until you can actually afford it. When it comes to transportation, it is usually not your only option. While shopping, keep in mind that you have other possibilities. 

When you believe you’ve found an economical option for buying a bike, carefully analyze major loan factors such as interest rates, down payment, and monthly payment. Due diligence before agreeing to any kind of loan will pay you in the end‚ÄĒand get you one step closer to your dream motorcycle.¬†


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