Life is a highway, and if you want to ride it all night long on your brand new motorcycle, you may also need to be shopping for a motorcycle loan. Many lenders offer financing for new and used motorcycles, but like a car loan, it’s important to shop around for the best rates and terms. There are also other parts of the process that are a little different than a regular vehicle loan, so knowing what to look for can be helpful.

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5.94% - 35.97%

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2-7 years

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What is a motorcycle loan?

A motorcycle loan is a type of loan that can be used to purchase a motorcycle. Most motorcycle loans are secured, using the motorcycle itself as collateral, though some loans can be unsecured. Lenders may also offer personal loans that can be used to finance a new or used motorcycle. There are several places you can get a motorcycle loan, and your interest rates and terms will depend on factors like your credit score and history, income, the make and model of the bike, and more.

How do motorcycle loans work?

A motorcycle loan can help you finance a bike if you can’t purchase it with cash. Like an auto loan for a regular vehicle, a motorcycle loan’s interest rates and terms depend on factors like the lender, your credit score and history, and your income. It also depends on the type of motorcycle financing you get.

After you shop for the best motorcycle loan for you, the next step is to apply. Once approved, you’ll be sent the loan funds and you can use them to purchase a new or used motorcycle. You’ll then pay it back in monthly installments plus interest until you’ve repaid the full balance.

How do I use a motorcycle loan?

How to use the motorcycle loan depends on where you get the loan from.

  • If you get the loan from a bank, credit union, or online lender, you’ll use the funds like cash. When you go to purchase the bike, you’ll withdraw the funds from your account to use cash or write a check that will withdraw from that account. It also typically works similarly if you get a loan from a manufacturer.
  • If you get a loan from a dealership, they will help you set up financing through either their in-house financing department or by submitting your application to a lender on your behalf. They will get the funds they need to purchase your bike, and then you’ll pay back the dealership or lender.

Be sure to check with the lender on any restrictions they may have, such as only being able to use the funds for a motorcycle and not a dirt bike, scooter, ATV, or other vehicle.

Where can I get motorcycle financing?

There are essentially five types of places you can research for a motorcycle loan including a bank, credit union, online lender, dealership, or manufacturer.

  • Like securing a personal loan, you can work with a bank or credit union to get a motorcycle loan. There are a few caveats, though. For example, banks typically have a higher credit score and other requirements in order to qualify, and their interest rates may be higher. For a loan from a credit union, you usually must be a member to apply.
  • For most borrowers, online lenders offer the most flexibility with rates and requirements, and it’s easy to get preapproved for estimates of your own rate, term, monthly payments, and other details. Plus, the application, approval, and funding process are typically faster.
  • If you choose to arrange financing through a dealership, they will likely submit your loan application to lenders on your behalf. While this may be more convenient than doing the process on your own, many dealers add fees to the lender’s quote so the loan will cost you more. It also prevents you from being able to comparison shop to get the best deal.
  • Some dealers also offer in-house financing, provided directly through the dealer. While this may seem appealing, especially for borrowers with poor credit, these loans usually have significantly higher interest rates and fees.
  • Motorcycle manufacturers may also offer loans that can be applied for online.

Types of motorcycle financing

In most cases, motorcycle loans and auto loans are not classified the same. When shopping, be sure to search specifically for motorcycle loans.

When doing this, you may also find motorcycle loans are broken down into additional categories, such as new vs. used bikes, or restrictions on what is and isn’t considered a “motorcycle.” For example, some lenders may not offer financing for dirt bikes or scooters. You’ll also find some lenders that don’t offer motorcycle loans at all.

Difference between secured and unsecured motorcycle loans

A secure motorcycle loan is when you have an asset, such as the motorcycle, a different vehicle, or even your house, as collateral for the loan. If you fail to repay the loan, the lender can seize the asset. While secured loans typically have lower interest rates, you also risk losing your assets if you default.

Secured loans are typically offered by banks and credit unions. They may also give you the option to add a down payment, which reduces the loan amount and the interest you’ll pay on the loan.

On the other hand, unsecured loans don’t require any collateral. However, they are likely more expensive because the lender is taking on a greater risk since they can’t seize your asset if you fail to repay. For this reason, unsecured loans may also require higher credit scores. These loans are most often offered by online lenders.

Related: Secured vs. Unsecured Personal Loans

Who are motorcycle loans best for?

Motorcycle loans are best for people who:

  • Can afford the monthly payments.
  • Have a great to excellent credit score and can qualify for low interest rates.
  • Have shopped and compared their options.
  • Don’t have cash on hand to buy a motorcycle outright.

A motorcycle loan is also best for those who use a bike as a primary mode of transportation. Otherwise, having both a car and motorcycle loan to repay can be more difficult so paying cash may be a better option.

It’s important before you apply for a loan to consider all of your options and ensure the financing will fit into your budget.

Is it smart to finance a motorcycle?

If you can pay for the motorcycle in cash, that’s likely your best option.

It’s only smart to finance a motorcycle if you can afford the monthly payments, and if your credit score and history are high enough to secure a low interest rate on the loan. Otherwise, you’re taking on debt that you may default on, which could mean being sent to collections and a serious negative impact on your credit score.

Additionally, if you don’t have a great credit score that qualifies you for a low interest rate, you’ll be paying more over the life of the loan. If you can, take time to improve your score before applying for the loan.

Related: Reasons to Get a Personal Loan

Pros and cons of motorcycle loans

ProsCons
Secured loans have lower interest ratesCan negatively impact your credit score
Multiple options for where to get a loan fromHigh interest rates for borrowers with poor credit
Motorcycles retain value, so can be a good investmentUnsecured loans have higher interest rates
Give you access to transportationMust provide additional information with application
Can help build creditFees

Alternatives to motorcycle loans

If you want to purchase a new bike but are exploring other financing options, a few to consider include:

1. Personal loan: Personal loan funds can be used for just about anything, including purchasing a motorcycle. It may be easier to get a personal loan than a motorcycle loan, especially if you have poor credit. The downside is you may pay more in interest and personal loans may have more fees.

Related: Everything You Need to Know About Personal Loans

2. Home equity loan (HEL) or home equity line of credit (HELOC): If you own your home, a HEL or HELOC can be a great financing alternative. Your home, not the bike, is used as collateral against the loan. The downside is if you default on the loan you could lose your house, but the benefit is that the interest rate may be lower if you have great credit.

Related: Home Equity Loans vs. HELOC

3. Savings: If you don’t need to make the purchase immediately, taking time to save enough to purchase the bike up front without financing can be helpful and allow you to avoid taking on debt and paying more interest and fees.

Motorcycle financing for bad credit

You can get a motorcycle loan with bad credit from certain lenders, though these are typically unsecured loans so the interest rate will be much higher. It may be difficult to qualify for a loan with a credit score lower than 629.

That said, many banks, credit unions, and online lenders will offer bad credit motorcycle loans, and making the loan payment on time each month can help build your credit.

Pros and cons of motorcycle loans for bad credit

ProsCons
Unsecured so you won’t lose any collateralMore difficult to qualify
Can help build creditInterest rates much higher
Can damage credit score

How to get the best vehicle loan for you?

Motorcycle loans aren’t as large as auto loans or even some personal loans, but it’s important to do your research and prepare in advance in order to get the best loan that works for you. Follow these steps:

1. Review your credit

Your approval, interest rates, and terms will depend on several things, but one of the primary factors is your credit score. If you’re wanting to purchase a motorcycle with a motorcycle loan, it’s important to check your credit score and review your credit history before you even start your research. If necessary, take steps to improve your score in order to improve your chances of approval and get a lower interest rate.

2. Determine what you can afford

Next, because a motorcycle loan is a type of debt, you’ll only want to borrow as much as you need and can afford. This depends on your income and personal budget, but getting prequalified for a loan and estimating monthly payments can help you decide if you can afford the loan or not.

3. Shop around

Because there are a few places that offer motorcycle loans, it’s important to shop around and compare your options. Researching different lenders will help you find the best interest rate and most favorable terms, as well as the most affordable monthly payment.

You should also comparison shop for the motorcycle itself to ensure you get the best deal.

Factors to consider when comparing motorcycle lenders

When researching lenders, a few factors to pay particular attention to include:

  • Loan requirements, including credit score, debt-to-income ratio, income, and others
  • Total amount you can borrow and whether that meets your needs
  • Monthly payment amount
  • Interest rate and APR
  • Loan terms
  • Fees and other charges, like late payment fees, prepayment penalties, origination fees, and others
  • Customer service reviews
  • Application process
  • Approval and funding time
  • Other loan features, such as online services to manage your loan

Some of these factors may be more important than others. For example, you want the lowest APR possible, but you aren’t in a rush to make a purchase, so the approval and funding time isn’t as high a priority. Having all the information before deciding can help you choose the right lender for your needs.

How do I apply for a motorcycle loan?

Applying for a motorcycle loan is slightly different than an auto loan because you may be asked to provide different or additional information. Otherwise, the process is essentially the same.

  1. Check your credit score and ensure it meets the lender’s minimum requirements. Try to improve your score if necessary.
  2. Gather and prepare paperwork and information. This can include proof of employment and proof of income, but you also may have to provide the motorcycle’s make and year, the estimated loan amount (including protective gear, sales tax, and registration fees).
  3. Get preapproved. Getting preapproved online won’t hurt your credit score but can give you an accurate estimate of your future loan’s rates, terms, and monthly payments. Use this to compare lenders.
  4. Apply. Once you choose the right lender for you, apply for the loan. This can usually be done online. To ensure your application is approved in a timely manner, be sure to include all information and requested documentation.
  5. Accept the loan and get funds. Once approved, you’ll accept the loan’s terms and conditions and then the funds will be transferred to your bank account.
  6. Repay the loan. You’ll have to start making monthly payments on the loan right away, so factor it into your budget and be sure to make your payments on time.

FAQs

In many cases, motorcycle loan rates are higher than auto loan rates because the likelihood of default is greater for a motorcycle than a car. Most lenders offer rates of 6% to 36% depending on your credit score, though some lenders have different regulations. For example, federal credit unions must cap their interest rates at 18%, but you must be a member to qualify.

Yes, you can get a loan for a new or used motorcycle, though manufacturers may only offer financing for new models. On the other hand, some manufacturers or dealers have special financing for used bikes, so it depends on what you’re looking for.

If you have an excellent credit score, proof of income, and a low debt-to-income ratio, it will not be difficult to finance a motorcycle. On the other hand, if your credit score is poor, you don’t have a steady income, or your debt-to-income ratio is high, it may be more difficult. Or, you may end up having a higher interest rate and paying more over the life of the loan.

Most motorcycle loans have repayment terms ranging from two to seven years, though some lenders have limited options available. Keep in mind that a longer repayment term means lower monthly payments, but you’ll owe more over the life of the loan due to interest. Shorter repayment terms have higher monthly payments but you owe less in interest.

The best way to get approved for a vehicle loan is:

  • Have a credit score of at least 660 or higher
  • Have steady, verifiable income
  • Have a debt-to-income ratio less than 36%
  • Provide all the information and documentation in the application

For most lenders, a credit score of 670 or higher will receive the best loan rates and terms. While you may be able to get a loan with a score at or under 600, the likelihood is lower, and you’ll also have much higher interest rates.

Other factors will play a role in the interest rate you receive, but your credit score plays a huge role in whether you get approved and what your rate will be. The lower your score, the higher your interest rates.

Yes, a vehicle loan can both positively and negatively impact your credit score. When you first apply for a loan, it will trigger a hard credit inquiry, which will temporarily decrease your score by a few points. If you continue making payments on time and work to decrease your overall debt, your score will rebound and may even increase. On the other hand, if you make late or miss payments, your score will decrease.