A motorcycle is much more than a vehicle. For many riders, it’s just as much a lifestyle as it is a mode of transportation. Every generation has an affinity for a style of bike, and it seems that the current generation of riders is embracing the rise of electric motorcycles.
Whether you’re a longtime rider looking to upgrade or you’re considering motorcycle ownership for the first time, both electric and gas-fuelled motorcycles often come with a sizable price tag. Financing your purchase with a personal loan might therefore be a good option.
Where to find a motorcycle loan
Finding motorcycle loans isn’t difficult. You have multiple options for securing a personal loan that can finance your purchase. It’s even possible to get approved and accept a personal loan without leaving your house. Most borrowers will look to an online personal loan lender, a traditional lender like a bank or credit union, or choose to finance through their motorcycle dealer.
Online lenders
Many lenders offer auto loans online, including brick-and-mortar banks or credit unions, while others operate only online. Eligibility requirements, interest rates, and funding times may vary between lenders.
Some lenders specialize in lending to borrowers with limited or low credit scores, while others may specialize in offering low-interest rates to borrowers with high credit scores.
Banks or credit unions
If you’ve taken out a mortgage or personal loan, you may have used a local bank or credit union. Both operate similarly when it comes to financing motorcycle loans. They’ll likely both require a minimum credit score, and credit unions will require borrowers to be members before approving a loan.
Credit unions may offer lower loan rates than banks, and both may require a small down payment. Both may be able to distribute funds for approved loans the next business day or within a few days.
Dealership financing
You also have the option to get a motorcycle loan directly from your dealer. Dealers like Harley-Davidson allow you to get pre-qualified with a soft credit pull so you can go to your local dealer knowing what amount and interest rate you’re approved for.
Often, dealerships can offer certain incentive programs that banks and credit unions can’t. For instance, low rates or manufacturer incentives for certain motorcycle models, or a lower interest rate if you trade in a motorcycle to use toward the purchase.
How to get a motorcycle loan
Whether you choose to finance through a dealership, the motorcycle manufacturer, or your local bank or credit union, the application process will likely be similar. Keep in mind that if you do choose dealer or manufacturer financing, the bike will be your collateral, while a bank or credit union may not require collateral at all.
Before applying for a motorcycle loan, it’s a good idea to get prequalified. Prequalification can streamline the buying process. If you can’t get prequalified, you’ll know where your credit stands and what you must do to get qualified, such as improving your debt-to-income ratio (the amount you spend on debt payments each month compared to your income).
Follow these steps when getting a motorcycle loan:
- Check your credit report. Knowing your credit score and any outstanding issues on your credit report will give you a sense of whether or not a lender will view you as a qualified borrower.
- Decide which type of lender to use. Online lenders, dealerships, and traditional lenders are all options. Investigate each to see which is most convenient and accommodating to your needs.
- Compare and pick an option. Compare rates from multiple lenders to see which can offer you the best deal. And make sure to factor in fees and other expenses as well.
- Complete the application. Finish your application, make sure all relevant data is accurate, and submit it to your lender.
- Get your funds. Depending on the lender, you may receive your funds as soon as the next business day.
Getting the lowest interest rate
In some cases, you may be able to qualify for a lower interest rate through an online lender or a dealership. One benefit of purchasing a motorcycle from a dealership is that you can negotiate the interest rate. This is because the rate that they quote you may be higher than the buy rate the loan lenders proposed to the dealer.
For example, a lender may suggest a 7% buy rate, and the dealer may quote you at 10%, an increased rate that allows the dealer to make money through the loan’s facilitation. You could potentially negotiate the rate down to the original rate.
Although their rates may be competitive, you can often compare rates across lender marketplaces to see who can offer the lowest rates to qualified borrowers. Some online lenders can offer lower rates than your local bank or credit union because they have limited operating costs and pass those savings along to their customers.
A motorcycle can be a good investment. Not only can it decrease the amount of money you might spend on maintenance and gasoline, but depending on the make and model of your bike, you may be able to resell this asset at a later date and recoup a significant amount of your investment.
| Tip: If you’re financing a motorcycle, it’s important to first identify a lender that can offer a personal loan that meets your needs. It’s a good idea to use a personal loan calculator before you apply just to see how much you might pay over time with different interest rates. |
Shop around and compare multiple lenders, taking into consideration their interest rates, eligibility requirements, fees, and repayment terms. You might discover that the best motorcycle loan for you isn’t the one with the lowest interest rate.