Should You Finance Your Motorcycle?

If you’re planning on buying a new motorcycle, you’re probably wondering if financing is the right option for you. Any motorcycle enthusiast understands the strong, emotional connection to their motorcycle but sometimes that kind of loyalty can get the best of you.

Finding the Best Motorcycle Loan

The first thing to consider is your monthly budget. Riding a motorcycle is an expensive hobby, as it can involve maintenance, high insurance rates and cost of gear. Be sure to calculate what you can realistically afford each month.

To start, it’s best to get a free credit check to see where you stand. Usually, a score of 620 is the baseline to qualify for decent financing rates. If your score is lower than 620, it might be best to try improving it or consider purchasing a cheaper motorcycle that you can pay for with cash. Since there are a couple different options for financing, do some shopping around to find the best loan. Luckily, credit pulls under the same industry within 14 days count as one inquiry.

Dealer Financing

Almost all motorcycle dealerships offer financing to their customers. Using the dealership for a loan is the most convenient option since you’re already buying your bike from them. Plus, you’re able to add accessories, parts and service contracts into your financing package.

However, you will only be prequalified or preapproved after deciding on the exact bike you want. Dealerships rely on your credit history so interest rates can vary quite a bit depending on your circumstances. If you know which bike you want, to be best prepared, apply for as many loans before going to the dealership, so you’re able to negotiate for the best option.

OEM (Original Equipment Manufacturers)

If you have great credit history and are certain of the bike you want to purchase, applying for a loan directly from the motorcycle manufacture is another great option. To do this, you can either go through the dealership, their website or the manufacturer’s website. Going through the manufacturer has the benefit of getting an APR as low as 0% for 60 months and/or rebates.

Typically, great offers are only available for newer models or on motorcycles models that are selling slowly. Unfortunately, you’ll only be approved if you meet the strict credit requirements depending on your credit score, financial standing or whether the manufacturer is offering a financing promotion. Similarly to dealer financing, it’s best to shop around before you apply for an original equipment manufacturer loan to compare your options.

Bank or Credit Union

Going through a bank or credit union can be a great option as well. Since your bank already has a relationship with you, they may feel inclined to offer you competitive rates to keep your business. But not all banks offer motorcycle financing. Chase or Capital One are huge competitors in the auto loan industry and don’t offer motorcycle financing. Other banks consider motorcycle financing as a personal loan, which tend to having higher APRs even if they’re secured.

However, if your bank does offer motorcycle financing, you can receive discounted rates if you make automatic payments or go through them directly for the loan. Be sure to shop around and see what rates different banks offer. Once you get an offer you’re satisfied with, head to the dealership to see if they can make you a better offer. If not, you know you have the best deal.

Personal Loan

Not all local banks and or credit unions offer motorcycle loans. Another option would be taking out a personal loan for your motorcycle. If you currently have a mortgage loan with your provider, you may qualify for lower interest rate personal loans. However, personal loans tend to have higher APRs.

Rider-to-Rider Financing

Harley-Davidson offers a Rider-to Rider financing program to individuals who are buying a motorcycle from a private seller. Participating Harley-Davidson dealerships help qualified buyers obtain competitive financing rates and terms.

Credit Card

If you’re able to put a down payment on a bike with cash, then completing the purchase of your motorcycle with a credit card that has a high credit limit, is another option. You’re able to avoid a credit check and financing applications. Your credit card’s interests rates may be higher so exploring other financing options before choosing that option is the safest bet.

When Financing is Not the Best Option

After doing all your research and choosing the exact bike you want, you may want to reconsider financing if this is your first motorcycle and you can get a loan at a reasonable interest rate. However, you should keep in mind that if you get injured, your financial situation changes or you decide that it’s not the right motorcycle for you, you will still be responsible for the money you borrowed at the interest rate you borrowed it at.

You will have to keep making the monthly payments or sell the motorcycle and pay off the loan balance. Otherwise, the lender keeps the title until the loan is paid off. If you were to sell your motorcycle privately, the buyer has to trust that you’ll pay off the loan and and send the title within a time frame they’re comfortable with.

If you wish to play it safe and avoid possibly paying high interest rates, buying a cheaper motorcycle and paying for it in full may be the best option for you. Whichever option feels the most comfortable for you and your budget, that is the one you should choose. At the end of the day, it is your motorcycle and your money, and your decision.

Searching online in your area on classifieds websites is a great way to get introduced into riding and to find affordable motorcycles. A couple thousand dollars can get you a great motorcycle that you’ll own outright. Plus, you have the option to sell it whenever you’re ready for an upgrade.