Want to get yourself a motorcycle? Finding the right loan can help you to get the motorcycle you want and start your two-wheel adventures.
What is a motorcycle loan
If you are trying to finance the motorcycle you have been admiring for a while, your best way to do it is by getting a loan to pay for it. A motorcycle loan is a type of loan designated to buy a motorcycle. They are usually secured - because it uses the vehicle as collateral. If the borrower fails in repaying the debt, the motorcycle can be repossessed by the lender.
However, there are some motorcycle loans that are unsecured, which would not put your new vehicle in risk at all. They are usually unsecured personal loans. But it is important to remember that this type of loans represent a bigger risk for lenders because they do not have a guarantee of your repayment. This can be the reason why an unsecured loan would come with higher interests and an specific - and higher - credit score as a requirement for approval.
How to finance a motorcycle?
There are many ways to finance your next motorcycle. The one you should pick will depend on your current financial situation and credit, because the conditions of the loan will be shaped around your profile and payment ability.
Here are some options you should think about financing your two-wheel vehicle:
▲Bank and credit union loans. This option has a lot of entities that offer recreational vehicle loans, that are shaped around the need of a motorcycle loan. But you can also apply for a personal loan since it can be used to cover any expense you want such as paying for a motorcycle.
▲Online lenders. Online lenders also offer financing through personal loans. However, there are some entities that offer specific loans to fund motorcycles and other costs related to it such as registration, licensing, insurance, etc.
▲Dealership or manufacturer financing: It is not new that dealerships and manufacturers of motorcycles offer financing. These companies may not offer you the best deal or conditions on your loan. However, it is a good option if you want to keep the whole motorcycle business in one place.
Steps to get a motorcycle loan
1. Check your credit score and other information
When you are trying to get a loan for a motorcycle, it is necessary to make sure you meet the credit score requirements. To do so, you can use some free online resources to get your credit score, asking your credit card provider or simply paying for your credit report from any of the three bureaus.
You will also have to check if your score is good enough for the entity you are trying to work with. These loans tend to be more strict with this requirement because they are not very common in comparison to auto loans and they represent a bigger risk because those vehicles can be stolen or crashed easier than other vehicles.
Generally, you should have at least a credit score of 620. If it was lower than that, you may wat to improve it before applying for it or go towards a bad credit loan.
REMEMBER: The better credit score you got, the better conditions and rates your loan will have.
Another thing to have prepared before applying to a motorcycle loan is the information you will have to provide when filling out your application. These data is usually:
✔ Social Security number and valid photo ID
✔ Income and employment details with proof of it
✔ Personal information such as contact details and home address
✔ Financial details such as current debts, assets, etc.
✔ Registration details for the motorcycle you are trying to get
2. Search for entities that would finance your motorcycle loan
If you are trying to get a motorcycle loan, your best deal might be from a Bank or a Credit Union, because of its low rates. However, if you want to get a personal loan to finance it, an online lender or a P2P one can offer you better rates.
If you decide to work with a banking entity, we recommend you to ask if your bank has a motorcycle loan option available because they already know your customer performance and might be able to offer you better rates than another entity.
3. Apply to one or only a few entities
Submitting applications too many lenders can potentially damage your credit score, since it would issue a hard inquiry every time your credit is evaluated for creditworthiness. Even though it would only put down your score in a few points, it can eventually start making the difference on it. We recommend submitting 3 applications at maximum. You can do this process either online, over the phone or visiting a branch, depending on the entity you want to make businesses with.
Before applying, also make sure that you have everything your lender requires for. Lenders tend to have different and specific required paperwork such as driver’s license, paycheck stubs, etc.
4. Settle with the best offer for you
Once the entities have a response for you - and hopefully approved you for the funds -, it is time to choose the option that gets you the best interest rates overall. Whenever you decide which one to work with, you are ready to use the loan and buy your motorcycle!
Tips to get the right motorcycle loan
✅Figure out the exact amount you are going to need for the vehicle including other expenses such as registration
✅Make sure you will be able to afford the monthly payments, calculating them according to the APR and extra fees.
✅Compare lenders and shops to get the best deal in the market for you
✅Try negotiating the conditions of the loan. You might be able to get better rates than the ones you were first offered.
✅Ask your lender if you can make extra payments in case you get extra funds in the future.
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