There is nothing quite like the feeling of freedom that comes from hitting the open road on a motorcycle. However, the cost of a new or used motorcycle can be in the tens of thousands of dollars. Most people don’t have that kind of extra cash sitting around in a savings or checking account and will need to obtain financing to buy one.
Whether you’re considering an upgrade to your current ride or are in the market for your first motorcycle, understanding the financing options available is an important step in the process. Several avenues exist to finance a new or used motorcycle purchase, but each option comes with benefits and caveats, just as traditional vehicle financing does.
Here are three of the most common ways to finance an ATV, cruiser, roadster, sport, off-road, scooter, moped, dual-purpose, trike, or another electric or gas-powered motorcycle from a dealer or private seller.
1. Finance a Motorcycle Using a Personal Loan
One of the most common methods for financing a motorcycle purchase is a personal loan from a bank, credit union, or online lender. Personal loans give you flexibility in how much money you borrow, how long you extend repayment of the loan, and the lender with which you work. Most personal loans are also not tied to the bike itself in terms of collateral.
Several lenders offer unsecured personal loans for individuals with credit ranging from fair to excellent, and the total cost of the personal loan – the interest rate and any upfront funding fees – will depend on how well you’ve maintained your credit history over time.
Another benefit of using a personal loan to fund your motorcycle purchase is that you will likely have a fixed monthly payment rather than a variable one, which makes budgeting a breeze.
Top Personal Loans for a Motorcycle
*See advertiser websites for a fully updated list of conditions, terms, rates, and fees.
2. Obtain a Motorcycle Loan from a Manufacturer, Dealer, Bank, or Credit Union
Motorcycle financing may also be available through certain manufacturers, dealerships, traditional lenders, and online platforms by way of a specialty vehicle loan. Like car loans, motorcycle loans offered through these lenders generally use the bike as collateral to secure financing, potentially bringing down the interest rate for you when compared to unsecured personal loans.
The cost of financing a bike purchase could be less than a personal loan using this method. However, if you default on the loan payment, the lender can recoup some of its costs by repossessing the motorcycle and canceling the loan.
Specialty vehicle loans secured by the bike will require proof of motorcycle insurance and will be limited in how much funding you can receive, typically based on the value of the bike to be bought. That’s unlike a personal loan, where you can request more money than the bike costs to be used on other gear, such as bike equipment, clothing, parts, and pretty much anything else, too.
Loans from these institutions that are specific to motorcycles typically require good credit, especially if you want to take advantage of a great promotional rate offer. So, this may not be the best choice for borrowers with a bad credit history.
3. Use Home Equity to Finance a Motorcycle
For homeowners, tapping into the equity of residential property through a home equity loan or home equity line of credit (HELOC) may offer an alternative solution to financing a motorcycle purchase. Home equity loans and lines of credit often carry low interest rates when compared to other financial products. However, the costs and time associated with originating each of them could outweigh the interest rate reduction.
Also, homeowners must first have enough equity in a piece of real estate to take advantage of home equity products to make a significant purchase like a motorcycle.
Home equity lenders will check your credit report and score before approving a new mortgage loan or line of credit, and an appraisal of the property is usually necessary for approval too. Then there are additional closing costs and other fees that may get added to the total loan amount and increase the annual percentage rate (APR) too.
One of the main benefits of using a home equity loan, or HELOC, is the ability to extend repayment for more years than you would a motorcycle loan or personal loan. Rather than paying the money back over 1-7 years, you could extend repayment up to 20 or 30 years. That will also reduce your monthly payment amount but could increase the total interest you pay.
Final Thoughts on How to Finance a Motorcycle
If you’re ready to fulfill your dream of owning a Honda, Indian, Yamaha, BMW, Kawasaki, Suzuki, Harley-Davidson, Triumph, Ducati, KTM, Husqvarna, Victory, or another name-brand motorcycle, you have plenty of options for how to finance the purchase. Most without requiring a down payment.
Personal loans offer the most flexibility, while specialty motorcycle loans provide a straightforward option for those with exemplary credit.
A home equity loan or HELOC might be the best choice for someone with a poor credit score or that needs lower monthly payments. You can use home equity to buy your new ride, but only when there’s enough equity available in your home or other piece of real estate.
I hope you found this article discussing the “best ways to finance a motorcycle” helpful. If you have a question, personal tip, or another comment, please don’t hesitate to use the Comments section below. Happy riding!
