At Law Tigers, we know the thrill of buying a new bike. The thought of revving the engine and cruising onto the open road is irresistible—the joy of getting out on a new motorcycle is exciting every time.
Still, before deciding to purchase a motorcycle, be sure to consider your finances and determine if you’re able to afford the bike of your dreams.
Financing a motorcycle is much different to that of financing a car, and taking out auto loans can be quite the process if you’re not aware. If you aren’t careful, you could end up with unnecessary financial struggles—especially if you haven’t closely monitored your finances before the purchase of your bike.
Read on to learn how to finance a motorcycle without the hassle.
How to Choose a Lender for a Motorcycle Loan
You can apply for motorcycle loans from credit unions, banks, online lenders, and motorcycle dealers and manufacturers.
When it comes time to choose a lender, the most readily available option is often motorcycle dealerships themselves. To get your sale, dealerships will usually work with you to find a loan–but not always at the best rates.
Likewise, a motorcycle manufacturer might offer financing options, especially to promote left-over inventory or new models. Either way, it’s crucial to read over your loan document and make sure you understand the terms and conditions of your loan before you sign the agreement.
The most affordable loans are through your local bank or credit union. The rates are more cost-effective, and you’re far less likely to take a loan with high interest rates that could cause you financial stress.
Credit Unions usually offer better rates than banks, but you’ll need to be a member. You may qualify for membership through your occupation, your location, or through your military service (such as Navy Federal Credit Union).
Which Type of Loan Should You Get?
Lenders may offer you either a secured or unsecured loan. These two products have different terms and conditions as well as different costs, in the form of interest rates.
Personal loans are unsecured loans because they do not involve collateral. An unsecured loan relies only on your creditworthiness.
You will find lower interest rates with secured motorcycle loans. For a secured loan, your motorcycle will become collateral, meaning that if you fail to make payments, the lender could repossess your bike if you fail to make your scheduled payments.
Your Credit Score Is Key
Just as when you purchase a car, lenders will check your credit score before approving your loan. However, motorcycles are considered a great risk to the owner, thus the risk of owning and riding a motorcycle gets calculated into your loan terms.
Your credit score still plays a significant role in how much a financial institution will lend you. From a lenders’ perspective, the lower your credit score, the riskier it is to lend to you.
It is possible to receive a loan with a poor credit score. However, remember that if you miss a payment on your bike, you may have your bike repossessed and significantly damage your credit rating.
Ideally, if you have poor credit, you should save up the cash to pay for a motorcycle. If you must take out a loan, you’ll want to pay off any credit card debt and increase your credit score as much as possible beforehand.
Motorcycle Financing Frequently Asked Questions
Can I finance a motorcycle if I have a poor credit score?
Poor credit makes qualifying for a loan harder, but not impossible. It still might be worth it to approach your local bank or credit union to discuss your financing options. Otherwise, several online lenders provide personal loans despite bad credit.
Other credit unions and online lenders may specialize in bad-credit loans as well.
If you find a lender that will accept you, remember that you’ll be paying higher interest rates as well as additional fees. Carefully consider your options and make sure that you can afford to maintain regular payments to prevent any further loss of credit.
What is the best way to finance a motorcycle?
As far as affordability goes, local banks and credit unions are your best direction when deciding how to finance a motorcycle. These institutions are likely to offer you better rates than most dealerships and provide you with the resources you need to get started.
However, choosing a lender aside, the most vital part of financing a new motorcycle is determining your budget. That new model you’re eyeing might seem enticing, but before you sign any paperwork, consider your finances and decide if you can truly afford future payments.
Ride Safely with Law Tigers Today
At Law Tigers, we’re riders just like you. We understand the glory of the open road, and we know how much a motorcycle accident can be potentially devastating to you and your family. Our team provides clients with quality representation in the event of a motorcycle accident. We know you’re itching to get back on the road, and we’re here to help.
Call us at Law Tigers at 1-800-529-8443 for more information and to schedule a free consultation with a motorcycle attorney near you today.
For over 20 years, riders have trusted Law Tigers to be by their side every step of the way. We’re here for you 24/7 to help with your motorcycle accident case. Call now for a free case evaluation.