A person driving a motorcycle around a curve at sunset

Motorcycle Financing: What Are My Options?

Hanna Kielar5-Minute Read
October 18, 2021

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There’s nothing like hitting the open road on a motorcycle – the wind in your hair, the sun on your back – but the cost of buying and maintaining it is another story. The average price of a new motorcycle is about $16,000, while lightly used motorcycles are usually in the $3,000 – $6,000 range.

If you’re interested in buying a motorcycle but don’t have enough money saved to pay in cash, you can explore other financing options. Let’s take a look at the motorcycle financing options that aspiring riders can pursue.

Types Of Finance For A Motorcycle

Aside from paying in cash, there are several ways to finance a motorcycle purchase. When deciding how to pay for your new bike, don’t forget to consider your personal budget and financial goals.

Motorcycle Loan

A motorcycle loan is a type of secured or unsecured loan that can be used to finance a new or used motorcycle. Some lenders, such as online lenders, traditional banks and credit unions, offer specialty “motorcycle loan” options. However, some motorcycle loans mandate the type and year of motorcycle the loan amount can cover.

The main difference between the two types of motorcycle loans is that unsecured loans don’t require you to put down collateral to secure the loan. The unsecured loan terms are determined based on the applicant’s credit score and other factors.

On the other hand, secured loans require you to use your motorcycle as collateral for the loan. This means that if you fall behind on your monthly payments, your lender could repossess your bike. Secured loans may also require a down payment, but the trade-off is that they typically offer lower motorcycle loan rates than unsecured loans.

Manufacturer Or Dealership Financing

Like buying furniture or a car, you can get financing directly from the motorcycle manufacturer or dealership. Not all motorcycle companies offer this payment option, but it’s available through many major manufacturers, such as Harley Davidson and BMW. While the specific details and terms vary by company, most motorcycle manufacturers offer financing for both new and used bikes.

Applying for in-house financing through the dealership may seem easier than applying for a loan, but this option tends to be more expensive in the long run. Since this payment method is targeted toward people with poor credit who may not qualify for a loan, in-house financing usually comes with a higher interest rate. Plus, manufacturers may tack fees onto the original quote.

Personal Loan

A personal loan can be used for financing a new or used motorcycle. Since this type of unsecured loan exists for any kind of major purchase, there are no restrictions on the model or year of your motorcycle.

A major perk of this payment method is that once you’re approved for the loan, you’ll receive your lump sum payment within a few business days. Plus, most credit unions, traditional banks and online lenders have this option.

How To Compare Options For Motorcycle Loans

Now that we’ve looked at the primary methods of financing a new motorcycle, let’s dig into the features you should considerwhen shopping around for the best option:

  • Loan terms: A rule of thumb for loans is that you should always consider the repayment terms. For example, a repayment plan of 5 – 7 years will offer lower monthly payments, but you’ll be paying for that expense for a longer period of time. On the flip side, repayment plans of only 2 – 3 years will have higher monthly payments, but you’ll fulfill the loan faster.
  • Loan amount: When choosing a loan and a lender, it’s best to make sure you can borrow the amount you need for your purchase. Personal loans can come in amounts of $1,000 – $50,000, and $100,000 in rare cases.
  • Annual percentage rate (APR): A loan’s APR is defined as its interest rate plus fees. This feature should be a major factor in your financing decision, and you should look for the loan option with the lowest APR.
  • Qualification requirements: Be sure to research the qualification requirements of each lender before submitting a loan application. Some lenders require a certain credit score or debt-to-income ratio (DTI), while other methods – such as manufacturer financing – have more flexible requirements for people with lower credit scores.

How To Get A Personal Or Motorcycle Loan

If you’ve narrowed your financing options down to a personal loan or motorcycle loan, you must take several steps before submitting your loan application. Here’s how to get a personal loan or a motorcycle loan:

  • Shop around for lenders. As with any type of loan, you want to shop around for quotes from multiple lenders. You can even compare motorcycle loan terms against personal loan terms to find out which option will provide you with the better deal on interest rates and repayment terms.
  • Secure your credit report. When applying for an unsecured loan, remember this: The higher your credit score, the more likely you are to get good loan terms. To make sure you land the best interest rate possible, double-check that your credit report is updated and accurate. Keep in mind that most motorcycle loan lenders require excellent credit scores to qualify for competitive rates.
  • Get prequalified. Prequalification is an important step to take, because it allows you to preview the loan terms that the lender is planning to offer – without affecting your credit score. Before moving forward with the approval process, be aware that submitting a full application will require a hard credit inquiry, which will affect your score.

FAQs About Motorcycle Financing

What credit score is needed to buy a motorcycle?

This can vary between lenders, but borrowers seeking a personal loan should have a credit score of 650 or higher to get decent interest rates.

Is there motorcycle financing for bad credit?

Manufacturer financing tends to have more lenient credit requirements, but these often come with higher interest rates and fees. For better rates and terms, do your best to improve your credit score before taking out a motorcycle loan.

What are normal motorcycle loan rates?

This varies between lenders and loan types. Personal loan rates tend to be between 6 and 36%, but your credit score and other factors ultimately determine them.

How do you finance motorcycle repairs?

If you can’t afford the out-of-pocket expense of repairing your bike, you might consider using a personal loan. Once you’re approved for a personal loan, you’ll quickly receive the amount you need to finance the bike repair, and then you can start repaying the loan in monthly installments.

Final Thoughts

Plenty of payment options are available to make your motorcycle dreams possible. Using a personal loan to finance a new or used motorcycle can allow you to take the bike home sooner and begin making set monthly payments right away, without any model or year restrictions. There’s also manufacturer financing if your credit score is too low for other financing. What’s most important is that you choose the loan that’s right for you and your situation.

If a personal loan sounds like your best option, get prequalified today with Rocket Loans℠ and see what rates you’re eligible for.

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Hanna Kielar

Hanna Kielar is a Section Editor for Rocket Auto℠, RocketHQ℠, and Rocket Loans® with a focus on personal finance, automotive, and personal loans. She has a B.A. in Professional Writing from Michigan State University.