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How to Finance a Motorcycle

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You can finance a motorcycle similarly to financing a car: check your credit score, decide on a budget, choose your ride and apply to a few lenders of your choice. With an array of offers, pick the motorcycle loan offer that’s best for you, sign on the dotted line and ride off into the sunset.

How to get motorcycle financing

1. Check your credit score

It’s smart to check your credit score before any major purchase. Each of the three main credit bureaus provide a free credit report to consumers once a year. Seeing your credit score at the start of the process will give you time to dispute any inaccuracies.

2. Decide on a budget

In general, the bigger the down payment and the shorter the loan term, the less you’ll pay in interest. It’s essential, however, that your monthly payment is affordable. You don’t want to miss payments and negatively impact your credit score, otherwise you’ll have the motorcycle be at risk of repossession. If you’re on the fence about a higher or lower payment, go with the lower payment and pay more toward the loan principal when you can. Here’s a motorcycle loan calculator to help you play with numbers.

3. Decide on a motorcycle

Motorcycle lenders will need to know the exact motorcycle you plan to finance. You should provide the lender with the motorcycle’s mileage and vehicle identification numbers (VIN), which will tell the lender its year, make and model.

4. Apply to a few lenders

Dealerships can frequently inflate consumer auto loan APRs, so get a couple of offers directly from lenders without a middleman. It doesn’t hurt your credit score to apply to multiple lenders for a motorcycle loan any more than it does to apply to one if you do all applications within a 14-day period. The U.S. credit bureaus allow this window so consumers can rate shop without being unduly penalized.

5. Sign on the dotted line

Choose the best motorcycle loan offer for you and finalize the paperwork with your lender. If you’re purchasing a motorcycle from a dealership, the finance manager can help steer you through your lender or the dealership finance manager will guide you through signing the paperwork. You could set up your payments for every two weeks, which would help you further reduce your interest payments.

Current motorcycle rates

When you look at motorcycle loans, you’ll see two main types of loan products: secured and unsecured. A secured loan uses the motorcycle as collateral, which means the lender could repossess it if you cannot make the payments. An unsecured loan relies solely on your credit score.

Motorcycle loan rates
Lender Starting APR* Terms (Months) Type
Digital Federal Credit Union (DCU) 3.50% Up to 60 months Secured loan
USAA Bank 5.49% Up to 72 months Secured loan
LightStream 4.29% Up to 72 months Unsecured loan
Navy Federal Credit Union 6.95% Up to 84 months Secured loan
Figure  5.75% 36 or 60 months Unsecured loan

*May require certain loan amount and/or term; may include an auto pay discount; may require membership

How to qualify for a motorcycle loan

For a secured motorcycle loan, lenders will look at your credit score, your down payment and how much the motorcycle is worth. For an unsecured loan, lenders will focus on your credit history. In either type of motorcycle loan, they will closely consider whether you can afford to make the payments. Bad credit motorcycle loans are available. If you have any questions, contact the lender you’re considering.

Where to get a motorcycle loan

  • Online lenders: Without brick-and-mortar locations, online lenders offer competitive rates, fast funding times and a fully-online application process.
  • Credit unions: According to the National Credit Union Association (NCUA), credit unions charge lower average rates than banks on all types of financial products. You do have to qualify for membership, but many credit unions, including national ones, have lax membership restrictions. Here are the best credit unions for motorcycle financing.
  • Banks: Many people prefer the brand name recognition and trust that national banks offer. It can also be convenient to work with an institution with which you already have an account.
  • Dealerships: You may have the opportunity to apply for financing through a dealership. Be aware that a dealer may be able to mark up your rate. It’s good to get a preapproval and shop around for a loan before you finalize the paperwork.

Other types of motorcycle financing

In addition to a secured or unsecured motorcycle loan, here are more motorcycle financing options.

Motorcycle leasing. You could lease a motorcycle rather than buy one.

Home equity loan or home equity line of credit (HELOC) — If you own your home, you could take out a loan against it. APRs are typically low on loans with real estate as collateral. However, you would be putting your home at risk of repossession if you can’t make payments.

Peer-to-peer lending — Rather than depend on a large company as a loan provider, you could look to your peers. A peer-to-peer loan can be a good fit for borrowers without the best credit, as many strongly consider your income over your credit score. The biggest con is that APRs are usually higher and there can be origination fees.

 

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