How To Get A Motorcycle Loan

Suchi Vora
by Suchi Vora

What you need to know about financing a new motorcycle

Photo by Audio und werbung / Shutterstock.com

Every motorcycle enthusiast wants their own set of wheels. One of the deterring factors that keeps you from purchasing your own motorcycle is the hefty price tag it comes with. If the upfront cost is holding you back, you might want to look into getting a motorcycle loan.


Types of Motorcycle Loans

  • Secured vs. Unsecured Loans: Motorcycle loans typically fall into two categories: secured and unsecured. Secured loans require collateral, often the motorcycle itself, which can be seized by the lender in case of default. Unsecured loans, on the other hand, don't require collateral but often come with higher interest rates.

Steps to Secure Your Motorcycle Loan

  • Evaluate Your Finances: Before you start getting into the process of procuring a motorcycle loan, it's best to get a good grasp of what your financial landscape looks like. Assess your income, expenses, and existing debts. Understanding your financial health is crucial for determining how much you can comfortably afford to borrow.
  • Check your credit score: This is one of the most important steps. A good credit score can help you get better interest rates on your loan. If you feel like your credit score needs some work, aim towards improving your score first by limiting your credit card usage and paying off any existing debts. A poor credit score can make it difficult to get approved for a loan. You can check your credit score for free on websites like Credit Karma or Credit Sesame. In addition to your credit score, lenders will also look at your income, debt-to-income ratio, and employment history. Having a stable job plus a low debt-to-income ratio can help you get approved for a loan.
  • Determine your budget: Setting a budget for your motorcycle depends on your spending capacity and needs to be fixed right in the beginning. Once you know how much you can spend, it's easier to determine the split between how much to allocate towards the down payment and the monthly payment. The larger the down payment, the lesser your monthly payments will be. But if you pick a longer repayment cycle, you’ll end up paying a larger sum in the form of interest over the months. It's best to pick an affordable, shorter loan cycle. It’s also important to consider all of the other costs associated with owning a motorcycle. This includes the cost of insurance, maintenance, and repairs plus the cost of accessories, such as a helmet, gloves, and riding boots. This will help you work backward and decide exactly how much you need to borrow and what kind of motorcycle you can afford.
  • Choose Your Motorcycle: Here comes the fun part. Do your research and make an informed choice as to which motorcycle you want to purchase based on your budget and specifications.
Photo by remek / Shutterstock.com
  • Research lenders: When researching lenders, it’s important to compare interest rates, loan terms, and fees associated with the loan, such as origination fees or prepayment penalties. You can check with banks, credit unions, and online lenders. It's best to get a quote from these lenders directly, without an agent, as dealerships usually tend to exaggerate loan APRs (Annual Percentage Rate). Plus this does no harm to your credit score if you make all your applications within a 14-day period. Once you have all your offers in, you can compare costs and pick the lender best suited to your needs.
  • Loan from Online Lenders, Banks or Credit Unions: If you apply for a loan from these traditional lenders, you can apply for pre-approval, which usually includes a quote with the estimated interest rate and the sum you can borrow. Pre-approval can help you understand the financing amount available to you and how to get the best deal. You still need to apply and get approved for the loan, even after pre-approval. The final estimates may vary as well.
  • Loan from a Dealership: You can also apply for a loan via the dealership. However, this is not the most favorable option since dealerships usually charge you more. Additionally, if you have poor credit, they try to sell you in-house financing which usually comes with high interest rates, increasing your borrowing cost.
  • Loan from the Manufacturer: Some manufacturers also offer direct financing for the motorcycle. For example: BMW and Harley Davidson offer financing options online or through their dealerships.
  • Finalize the loan: Once you’ve chosen your motorcycle, negotiated, and fixed the price, you can finalize the loan. Make sure to read the loan agreement carefully and ask any questions you may have.
  • Make your payments: Once you’ve finalized the loan, make sure to make your payments on time. Late payments can hurt your credit score and make it harder to get loans in the future.
Photo by Antonio Guillem / Shutterstock.com

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Suchi Vora
Suchi Vora

Suchi is the voice behind the handlebars as Motorcycle.com's latest addition. By day, she fuels her passion through creative marketing endeavors, and contributes her free time to Motorcycle.com

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  • Tech Tech on Jun 13, 2024

    I pay cash for everything. I am too poor to take out a loan and make interest payments (I hate banks). Paid cash for my last motorcycle and the used sports car that ran me $184,190 out the door.

  • Mitch Mitch on Jun 14, 2024

    Pay cash and don’t enrich the lender while screwing yourselves. Shop used, low mileage Bikes as this is where the real deals are found. Research the ACTUAL value of the Bike(s) you’re looking for and drive hard a hard bargain. You’ll be surprised at how many low mileage Bikes are sitting in people’s garage just wasting away.

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