Get a Motorcycle Loan

Ready to get that bike you've been eyeing for a while now? Getting a motorcycle loan requires consideration of credit, your budget and comparing quotes. This article provides some details on how to get a good loan.

Steps

  1. Know your credit score. Before you submit a motorcycle loan application, consider taking a look at your credit report. Lenders see motorcycles as risky because bikes are frequently stolen or crashed. As a result, lending requirements are more strict with motorcycles than with cars.
    • If you have one slight blip on your credit report you may get declined. It is best to study your credit report before submitting an application and if you find inaccurate information, have it fixed before submitting an application.
    • Lenders do not like to see high credit card debt when looking at motorcycle loans. If you have high credit card debt it is highly recommended you pay off some of your debt before applying.
  2. Create a budget and know how much you can afford. Before you apply for a loan, you should understand your budget and how much you can afford.
    • Don’t stretch yourself so far in debt that it is difficult to make your loan payments. You may find it necessary to accept a less desirable motorcycle to afford the loan, but at least you still get to ride.
  3. Avoid common motorcycle financing mistakes. Avoiding common mistakes is the key to having a good experience when financing a bike. Some of those mistakes include being afraid to ask question about the loan, borrowing too much, and opting for a credit card motorcycle loan.
  4. Comparison shop. Make sure you not only shop for a loan in a dealership, but you also shop online motorcycle lenders, your local bank and credit union. Here are some general financing options:
    • Dealer Financing: Most motorcycle dealerships will offer financing directly to consumers. Interest rates will fluctuate depending on the applicant, based on your credit history.
    • OEM Financing: OEMs (Original Equipment Manufacturers—Harley, Yamaha, etc.) usually have financing available to purchase new bikes. Interest rates will fluctuate based upon your credit history, financial standing and any current OEM promotions.
    • Credit Card: If you have an existing credit card with a high enough line of credit, you can make your motorcycle purchase using that card. The benefits include no credit checks, financing applications, or pre-payment penalties, but be prepared for a significantly higher interest rate. Be aware of the current interest rate on your credit card and how this compares to your other financing options.
    • Personal Loan: Your local banking institution or credit union may or may not provide motorcycle loans, but if you currently have a mortgage with your loan provider, you may qualify for reduced interest rate personal loans.
    • Cash: You remember cash, don't you? It's that green stuff that comes out of ATM machines. Benefits include no monthly payments or finance charges. There are no drawbacks, per se, other than taking that cash being gone from your assets.
  5. Find the best option. To find the best interest rate and terms you should shop at least 4 lenders.
    • When credit shopping, you should do it all in a couple days time to ensure it does not hurt your credit score.
    • Be wary of loans that require you to put your house up as collateral. You never want to put that at risk for a bike. Motorcycle loans will not have these in the terms, but some may.
    • You can look many places for these loans. A local motorcycle shop may have options, your bank or credit union will, and you can even find a motorcycle loan online. Your needs are different from others, so some loans may be better or worse for you.
    • For those with less than stellar credit, there are lenders who will take a risk with you. However, be prepared to pay a significantly higher interest rate should that be the case.
  6. Select the best quote. After you comparison shop you will want to select the best motorcycle loan quote to fit your need. You will want to consider the interest rate, and the terms of the loan.
    • The longer your loan, the lower your payment, but this will also mean you have less equity in your bike if you decide to sell it in 2 years, plus you will end up paying more for it in the long run as interest rates mount up.
    • Determine if the loan terms have a prepayment penalty and look at the details of fees to ensure you are selecting the best terms.
  7. Purchase your bike. This is where the fun begins and you get to purchase a new bike and enjoy the motorcycling lifestyle.

Tips

  • Read the fine print on your bike loan contract.
  • Consider making a down payment to get equity in your motorcycle.
  • Ask lots of questions.
  • Get multiple loan quotes.
  • Avoid signing a contract you do not understand.
  • Never take a loan you can't afford
  • Try local credit unions for lower interest rates.

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Sources and Citations

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