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Motorcycle Financing: What Are My Options?

Hanna Kielar4-Minute Read

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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 brand-new motorcycle is about $16,000, while lightly used motorcycles usually range between $3,000 and $6,000.

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

Types Of Motorcycle Financing

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 loan 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 creditworthiness.

On the other hand, secured loans require you to use your motorcycle as collateral for the loan. That 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 on additional fees to the original quote.

Personal Loan

A personal loan is a common method of financing a new or used motorcycle. Since this type of unsecured loan is available 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, this option is available through most credit unions, traditional banks and online lenders.

How To Compare Motorcycle Financing Methods

Now that we understand the primary methods of financing a new motorcycle, let’s dig into the features you should look for when shopping around for the best option:

  • Repayment 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.
  • Annual percentage rates (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 that offers 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 Finance Motorcycle Repairs

Unfortunately, there’s always the chance of your motorcycle getting damaged or needing repairs. In that case, it’s up to you to figure out how to pay for the necessary repairs.

While some motorcycle parts are relatively inexpensive to replace, some replacement services can cost thousands of dollars.

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.

How Do I Get A Personal Loan Or Motorcycle Loan?

If you’ve narrowed your financing options down to a personal loan or motorcycle loan, there are several steps to take 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 it comes to applying for an unsecured loan, remember this: The higher the credit score, the better the likelihood of getting good loan terms. To make sure you get 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.
  • Apply for prequalification or preapproval. Prequalification is an important step to take, because it allows you to preview the loan terms that the lender is planning to offer. Before moving forward with the approval process, be aware that submitting a full application will require a hard credit inquiry, which will be reflected on your credit report.

Final Thoughts: Pick The Financing Option That Fits Your Budget

If you’re ready to hit the open road on your own motorcycle, there are plenty of payment options available to make that dream possible. Using a personal loan to finance a new or used motorcycle allows you to take the bike home sooner and begin making set monthly payments right away. Plus, you can shop for your next motorcycle without any model or year restrictions.

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Hanna Kielar

Hanna Kielar is an Associate Section Editor for Rocket Mortgage focused on personal finance, recruiting and personal loans. She has a B.A. in Professional Writing from Michigan State University.