How Does a Motorcycle Loan Work?


Where to Find the Financing

  • As with automobiles, most motorcycle dealerships have financing options when you go to by your bike. They usually have lenders that deal with all kinds of credit situations. Buying a motorcycle from a private party, however, makes finding the lender a little more difficult. Banks and credit unions are a good place to start. Have your credit report with you when you shop for a loan. This way the lender can tell you the terms of a loan they have for you, and you can compare to other lenders. Do not use one of those online lenders that you give your information and they have up to four lendesr call you with offers. By doing that, many lenders are requesting your credit and that will have a negative affect on your credit score.

Terms of the Loan

  • Every lender will have different loan terms. The most common loans are two to four years or four to six years in length, depending on your needs. You will pay a higher rate to use the money for a longer period of time. The best rates are given for brand new motorcycles and then adjusted for your credit score. The lower your score the higher the rate. They will usually ask for a down payment. Used motorcycles have a slightly higher rate than new, and some lenders will charge an even higher rate if the bike is bought privately as opposed to from a dealer.

  • There are usually other fees associated with financing beside the interest rate. A common fee would be the charge for preparing the contract. Some lenders will allow you to finance the tax, tags and registration in with the loan. Finding out what their fees are and what they are for is important. Most lenders will require full insurance coverage while the loan is in effect. Although this will not be a fee in the loan, it will be an added expense. Asking questions of the dealer and the lender can end up saving money in the end.

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