How to get a motorcycle loan

It’s possible, but not always advisable, to finance a motorcycle — either with a motorcycle loan or an unsecured personal loan.

Anna Swartz 1600

Anna Swartz

Published July 24, 2019

KEY TAKEAWAYS

  • You can finance a motorcycle with a dedicated motorcycle loan from a bank, credit union, or dealership

  • You can also take out a personal loan to purchase a motorcycle, but expect high interest rates

  • Given that starter motorcycles are relatively affordable, new riders should consider whether it’s possible to buy a new bike with cash instead of financing it

Buying a new motorcycle is a big decision, whether you’re a first-time rider or an experienced biker. You may be able to find an affordable used motorcycle for sale in your area if you spend a little time researching what’s available — but if you have your heart set on a new bike, or a pricier used one, you’re probably wondering whether a motorcycle loan is a good option.

Financing a motorcycle may be a little trickier than getting a car loan. Most banks and credit unions offer dedicated auto loans for new and used cars, but that may not be true of all banks and credit unions when it comes to motorcycles. Some may not finance motorcycles or have restrictions on the type of motorcycles they’ll finance, or even offer different kinds of loans for new and used bikes.

Securing financing through a motorcycle dealership is another option for buyers. And if getting a dedicated motorcycle loan isn’t an option, you can consider taking out an unsecured personal loan — although personal loans have high interest rates, and first-time drivers may want to consider whether it’s worth taking on an expensive loan for a ride that they might not stick with.

In this article:

Options for financing a motorcycle

If you’ve decided to finance a new or used motorcycle, you should treat it like shopping for a car loan, even if it’s for a lower amount. Shop around and compare loan offers from different lenders to make sure you’re getting the best deal, and weigh all your options before you sign onto a motorcycle loan.

A motorcycle loan from a bank or credit union

Getting a motorcycle loan through a financial institution like a bank or credit union works much like getting a car loan. You apply for a loan (you can also apply to be preapproved, just like with a car loan), receive an offer, and sign a loan agreement if you agree to the terms of the loan.

When considering a motorcycle loan offer, look at more than just the monthly payment. It’s important that your monthly payment fits within your budget, of course, but it’s also crucial to consider the loan term, or the length of the loan.

A longer loan term can mean lower monthly payments, but remember, you’re paying interest too, and even with a low interest rate, a long loan term can cost you more over the life of the loan than a shorter one.

Not all borrowers will get the same loan offers — a borrower with a higher credit score will get a better loan offer, and a poor credit score may mean worse offers, or even that you’ll be denied by lenders.

Learn more about how auto loans work.

Financing through a dealership

Like with cars, when you’re buying a motorcycle from a dealership you can usually finance the bike through the dealership too. Going through the dealership gives you the convenience of a one-stop shop — you can get your motorcycle and the loan to pay for it all in the same place.

However, when you go through the motorcycle dealership you can miss out on the benefits of shopping around, so it’s still a good idea to look into other motorcycle loans and see if there’s room to negotiate at the dealership. Dealership financing may also come with higher interest rates than you might get from a bank or credit union, another price you pay for convenience.

Financing a motorcycle with a personal loan

Motorcycle loans are secured loans, meaning the motorcycle acts as collateral. But if you can’t find a motorcycle loan to help finance your new bike, you might consider an unsecured personal loan.

A personal loan doesn’t use your property as collateral, instead, it’s an agreement between you and the lender that you can borrow a certain amount of money and pay it back over time, plus interest, or risk defaulting on the loan which could result in wage garnishment, meaning the money you owe on the loan can come straight out of your paycheck.

Interest rates tend to be higher for personal loans, because they’re unsecured, and they may have prepayment penalties, meaning you’ll pay an extra fee for paying off the loan too early. As with a motorcycle loan, when shopping for a personal loan you should consider both the APR, essentially the interest rate, and the loan term to make sure you’re actually choosing the most cost-effective loan.

Learn more about personal loans.

Is financing a motorcycle a good decision?

Before you decide how to finance your purchase of a new or used motorcycle, it’s important to consider whether or not financing is right for you in the first place. New or inexperienced motorcycle riders should think hard before committing to a loan paying for a bike that they might, it turns out, not enjoy riding as much as they think they will.

You don’t want to be stuck making monthly payments on a motorcycle you’re not using. Or, even worse, making payments on a bike that’s lost a significant amount of value, which can happen, especially with first-time riders who may be more likely to scrape up their new rides.

As we mentioned above, it may be possible to find an affordable starter bike in your area for less than you’re thinking of spending, and if you can wait and save up to buy a motorcycle with cash, that may be a better option than taking out a loan.

How does financing a motorcycle affect insurance?

Owning a motorcycle can be pricey — even if you’re not making payments on it, there are the costs of maintenance, gear, and of course motorcycle insurance. Just like with car insurance, your state requires you to carry a certain amount of insurance coverage on your motorcycle. But even beyond what’s required by state law, if you finance a motorcycle you may have additional insurance requirements. Some of the types of coverage a typical motorcycle policy might include are:

  • Liability coverage. Covers you if you damage someone’s property or injure someone while you’re on your bike.
  • Uninsured/underinsured motorist coverage. Covers you if you’re in an accident caused by someone who doesn’t have their own insurance, or whose insurance doesn’t cover the full extent of the damage.
  • Personal injury protection. Covers medical expenses or lost wages if you’re hurt in a motorcycle accident.
  • Collision coverage. Covers damage to your motorcycle caused by a collision, regardless of who was at fault.
  • Comprehensive coverage. Covers damage to your motorcycle that happens when it’s not being driven, like damage from extreme weather or vandalism.
  • Guest passenger liability coverage. Covers medical payments for passengers on your motorcycle who are injured while riding with you.

If you finance a motorcycle, your lender will likely require you to have comprehensive and collision coverage as part of your policy. Remember, your lender has a stake in your motorcycle for as long as you still owe money on the loan, and they want to protect their investment too.

Learn more about motorcycle insurance.

Policygenius’ editorial content is not written by a certified financial planner or advisor. It’s intended for informational purposes only and should not be considered legal, financial, or investment advice. Consult a professional to learn what financial products are right for you.

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