Get financing for a motorcycle, sport bike, moped or scooter
Four wheels move your body, but two wheels move your soul. When you’re ready to join the culture of the bike world — whether it’s the cruisers, the tourers, the off-roaders or the scooter and moped riders — the fact is that bikes cost money, and getting a motorcycle loan might be the best way to join the wave.
Motorcycle loans are similar to car loans, but there are enough differences to warrant some research before you apply for a loan. By choosing the motorcycle lender that’s right for you, you can save money on your ride.
4.5% to 10%
10% to 20%
There are a variety of motorcycle types available, so think about why you want to ride. Do you want to cruise the highways in comfort on a touring bike or boost your gas mileage on your daily commute?
Although there are similarities between motorcycle and car loans, lenders see two big differences.
Accidents happen. From a lender perspective, a car accident is much less expensive than a motorcycle accident. Statistically, bikes are totaled more often, and so the lender loses its collateral for the loan, which increases the chances that the loan won’t be repaid.
Lenders view a motorcycle as a luxury purchase rather than necessity. In general, you ride only on good-weather days and only for part of the year. Bikes are stored during the winters and rainy seasons. If a borrower falls on hard times, he’s more likely to keep up payments on a vehicle — a necessity for getting to work that can be used year-round — as opposed to the motorcycle.
Because motorcycle loans are riskier for lenders, interest rates tend to be higher and loan terms tend to be less favorable when compared to auto loans.
Rates and terms on motorcycle loans can vary widely depending on a number of factors.
Generally speaking, the longer the loan, the higher the interest rate; the shorter the loan, the lower the interest rate. Lenders find shorter loans less risky, which means a lower interest rate for the borrower.
The borrower’s credit can have a significant impact on the overall cost of the loan. Borrowers with lower credit scores and more existing debt face higher interest rates and less favorable loan terms because they represent a greater risk to the lender.
The amount of money the borrower puts down on a loan can have a large impact on the interest rate, as well as the length of the loan term. If you want a lower interest rate or a longer loan term, offer a larger down payment.
Many manufacturers and dealers offer branded credit cards that can be used to purchase motorcycles. Although using a credit card is perhaps the easiest way to purchase a motorcycle, it also can be one of the costliest, as credit cards tend to have higher interest rates than other financing options, especially if you have less-than-stellar credit. A secured loan that uses your motorcycle as collateral may offer better rates. Always check the fine print on credit card offers.
Although motorcycle loans are not nearly as ubiquitous as car loans, many banks and credit unions offer loans geared specifically toward motorcycle purchases. National banks and credit unions may be more apt to offer motorcycle loans than local lenders, but be sure to shop around and find the lender offering the best rates.
Motorcycle dealers may offer in-house financing or partner with a third-party financial institution to offer loans. Dealers often offer enticing promotions, such as no interest for a set period of time. Regard these promotions with a skeptical eye, however. For example, some loans offering zero-interest for a set period of time revert to a high interest rate if you’re late on a payment. Or the interest rates skyrocket after the introductory period ends. Be sure to read the fine print before signing a loan agreement.
If you take out an unsecured personal loan to purchase a motorcycle, you don’t have to offer up the motorcycle as collateral. That can be good for you, because if you fail to repay the loan in the future, the bank can’t repossess your bike. Unsecured loans typically have higher rates than loans that are secured by collateral, however.
When looking into used motorcycle loans, keep in mind that the financing may be more expensive. Compared to buying a new motorcycle, you may need to make a larger down payment, and pay a higher interest rate.
This is because the lender’s risk increases the more mileage a motorcycle has on it. Additionally, motorcycle depreciation can vary widely. Desirable brands, such as Harley Davidsons, retain their value better than other models, for example. Use a tool such as Kelley Blue Book to look up the value of any motorcycle you’re planning to purchase.
Keep the following additional points in mind when shopping for a used motorcycle.