Auto LoansMotorcycle Loans

How to Finance a Motorcycle

If you’re looking for a motorcycle, you could be spending anywhere from $1,500 to $55,000 or more. They can cost as much as a car and roughly involve the same process to buy. However, a motorcycle loan might be more difficult to find and could be more expensive with generally higher starting rates, around 5% APR. Don’t be worried though. Like auto loans, there are several places to get motorcycle financing with reasonable rates.

How to get a motorcycle loan

Most people apply for financing through the dealership after they pick out the bike they want. A better way:

Step 1: Get a loan preapproval before you start shopping. Dealerships can raise your APR. But if you get a preapproval offer directly from a lender, you cut out the middleman.

Step 2: Use a motorcycle loan calculator to compare offers and look at total finance charges, not just APR and monthly payment.

Step 3: Pick the best loan for you, finalize the offer, sign and drive off into the sunset with your new ride.

Online lenders

When you shop online for financing before you look at bikes, you’ll have a better idea of what price range you should look for. And this way, you won’t worry about whether you’ll be able to get a loan for the motorcycle you fell in love with because you’ll already have a loan in hand. Once you do find the iron horse of your dreams, you can show the dealer the loan offer you have and see if they can offer you anything better. If they can’t, you’re already set.

How it works

You can find an online lender that offers loans for motorcycles, like LightStream, or a site that lets you apply to several online lenders and compare motorcycle loan offers all in one place. At LendingTree, you could fill out a single online form to receive up to five potential loan offers from lenders at once, depending on your creditworthiness. To apply, you may need to provide:

  • Desired loan amount and loan term
  • Personal details such as name, address, Social Security number and income
  • Year, make and model of the motorcycle you want

Some lenders may not require you to know the exact make and model in order to apply for preapproval. But if you haven’t decided on which particular motorcycle you want and the lender requires you to choose a specific vehicle in your application, don’t sweat it. If you change your mind at the dealership, you could contact the lender and change the motorcycle.

  Upsides

  • See what your rates and terms would look like based on your credit score and desired loan amount.
  • You don’t have to know the exact motorcycle you want in order to apply.
  • Compare several offers at once.

  Downsides

  • More difficult to include accessories or extras like an extended warranty.

Financing a motorcycle through a bank or credit union

If you’d be more comfortable working with a lender you see in person, banks and credit unions can be a great option as well. The financial institution you bank with already has your information and a relationship with you, and could offer competitive rates in order to keep your business.

“From what I’ve seen, it’s probably worth a conversation with your bank,” said Jim Holtzman, a Pittsburgh-based financial planner. “The thing to explore is the interest rate.”

Discounts for customers

Many banks (both online and brick-and-mortar) offer rate discounts on motorcycle loans if you make automatic payments and have a qualifying relationship with them. For example, Wells Fargo offers rate discounts if you make automatic payments through a Wells Fargo consumer checking account.

How it works

Apply for bank financing directly through your bank and get offers from at least two or three other lenders as well. Then head to the dealership with those offers in hand. When you arrive and speak with the financing manager, they will take a look at your best financing offer and likely turn to the dealership’s network of lenders to try to beat it. If they can’t, you know you’ve got the best deal possible, which is the beauty of shopping for financing before you go to the dealer.

  Upsides

  • In-person banking: Banks and credit unions usually have brick-and-mortar branches you can visit.
  • It may be convenient to have your motorcycle loan under the same roof where you have your checking or saving accounts or other vehicle loans. As we mentioned earlier, some offer APR discounts to existing customers and/or those who use automatic draft to make monthly motorcycle payments.

  Downsides

  • Not all banks offer motorcycle financing. Capital One, Chase and Bank of America are notable auto lenders that don’t finance motorcycles.
  • Other lenders might offer motorcycle financing but it’s actually a secured personal loan, not a vehicle loan. In these cases, you’re usually looking at a higher rate.

Financing a motorcycle through the manufacturer

If you purchase from a dealer and have great credit, you may be able to score a loan directly from the motorcycle manufacturer. This can potentially be a pretty sweet deal. Depending on the time of year and the model of motorcycle, manufacturers may offer APRs at or near 0% for up to 60 months and/or incentives like rebates. But there’s a catch — you typically need to meet strict credit requirements to get the best deals.

How it works

You can either go to a dealership, a dealership’s website or the manufacturer’s website to pick out a bike. You have to know exactly which motorcycle you want before you apply for a loan with the manufacturer. Once you’ve got your bike picked out, you can apply at the dealership or online. Again, it’s best to do your own research and get quotes from other lenders first in case you can’t qualify for the manufacturer’s offer.

  Upsides

  • Financing through a manufacturer is your best bet for the lowest loan APR. They’re low because manufacturers use them as a way to entice customers into dealerships.
  • You may be able to include accessories into the financing.

  Downsides

  • No prequalifications or preapprovals — this means you won’t know your exact APR or terms until you pick out a specific motorcycle and apply for financing.
  • Low APR deals may not apply to the model you want. This means you might have to do more research to time your purchase with deals that often change depending on the time of the year.

Dealership financing

Dealership financing seems like the most convenient option. You’re going to purchase a motorcycle from the dealership, so why not kill two birds with one stone? Dealerships have relationships with a network of lenders, so applying for a loan here may result in several loan offers.

However, the best way to ensure you’re getting the best possible deal on your loan is to bring in your own financing when you go to the dealership. Dealerships can and often do increase your APR, taking the difference as profit. If you don’t know what APR you qualify for, you may end up signing for a higher rate than you have to. Shop for motorcycle financing through other lenders first, get a few offers and bring them in with you. Unless you shop for loans on your own and bring in a better offer to make the dealer compete, you may walk away with a much higher rate than necessary.

What to know about in-house financing

Car lots advertising in-house financing serve as seller and lender. Their “buy-here-pay-here” offers are usually extended to borrowers who don’t qualify for a loan elsewhere because their credit is poor. As a result, APRs may be expensive, up to the maximum rate allowed, 26.75% in some states. A bad-credit motorcycle loan could be a less expensive alternative.

How traditional dealership financing works

At a dealership, you may be able to fill out an application for a specific motorcycle (with or without accessories). The dealer will then submit it to its network of financial institutions, such as banks, credit unions and the manufacturer. If you’re approved for financing, the salesperson or finance manager will let you know right away. But take it from us — you definitely want to get other offers first and have them on hand to compare.

  Upsides

  • Offers from a variety of lenders that you can see at once.
  • Add accessories, appearance parts and service contracts into your financing package.

  Downsides

  • No prequalification or preapproval; you have to know the exact motorcycle you want.
  • Higher APRs than what you may qualify for by obtaining your own loan.
  • Pressure to add expensive add-ons, such as service contracts, extended warranties and guaranteed auto protection (GAP) insurance.

Benefits of comparison shopping for a motorcycle loan

No matter how you end up financing your motorcycle, make sure you shop around for the best motorcycle loan. It does not hurt your credit to apply to multiple lenders any more than it does to apply to one, as long as you complete applications within a 14-day window. Some credit-scoring models may allow up to 45 days.

If you shop around for a rate before you go into a dealership, you have leverage to negotiate. You’ll already have an offer, so your rate can only get better.

 

Compare Motorcycle Loan Offers