Best motorcycle loans

More details about our top 4 motorcycle loan lenders

What is a motorcycle loan?

A motorcycle loan is a financing option available to those purchasing a new or used motorcycle. You can get a motorcycle loan from banks, credit unions and online lenders. Motorcycle loans can be either secured or unsecured. Here’s how the two options differ:

• Secured motorcycle loans: The motorcycle acts as collateral with these loans. If the borrower defaults on the loan payments, the lender can repossess the motorcycle. Because these loans are secured, they tend to have lower interest rates than unsecured motorcycle loans.
• Unsecured motorcycle loans: These loans don’t have collateral behind them. Instead, the lender assesses the borrower’s creditworthiness to approve the loan. This means the lender will check factors like credit score, income and debt-to-income ratios. These loans tend to have higher interest rates.

The typical loan term for a motorcycle loan usually spans from 12 to 60 months. The longer the term, the lower the monthly payments, but the more you'll end up paying in total interest over the life of the loan.

Motorcycle loan vs motorcycle financing

Depending on where you are purchasing your motorcycle, you might be offered financing from the dealer. This may be convenient, but it could cost more than getting a loan elsewhere.

It’s a good idea to explore motorcycle loan options from different sources — banks, credit unions, online lenders, peer-to-peer lenders — to find the best possible offer.

How to apply for a motorcycle loan

You may be able to get a loan for a motorcycle with a motorcycle loan, unsecured personal loan or secured personal loan that uses the bike as collateral. Secured loans tend to have lower interest rates, which saves you money.

Before you apply for a loan, you should know which motorcycle model you want to purchase so you know how much you need to borrow. Ask the seller to provide a full quote, including taxes and fees.

Next, explore lenders that let you use funds for a motorcycle purchase. Some let you check rates and terms without a hard credit inquiry, which makes it easier to compare your options. When you find the right loan for you, the lender will run a hard credit check to complete the application process. Read over the terms of your loan agreement carefully before signing.

» COMPARE: Personal loan lenders

How do motorcycle loans work?

Motorcycle loans are typically installment loans with fixed monthly payments, similar to personal loans. Here’s how they usually work:

1. Application: First, you apply for a motorcycle loan through a bank, credit union or online lender. The lender will use various factors to determine your creditworthiness. This will determine your interest rate and terms, though securing the loan with the motorcycle can lower the rate.
2. Terms: Motorcycle loan repayment terms typically range from one to seven years. Shorter terms mean higher monthly payments but less interest overall.
3. Interest rates: These can vary widely for motorcycle loans. You’ll likely qualify for a lower rate if you have a better credit score. However, you may also get a lower rate if you use the motorcycle as collateral.
4. Repayment: Motorcycle loans usually have fixed payments, meaning the amount stays the same until the loan is fully paid off. Each payment will include an interest portion and a principal portion.
5. Fees: In addition to interest, motorcycle loans can have other fees. These might include origination fees, prepayment fees and administration fees. In some cases, lenders might require extras like gap insurance or extended warranties, which further add to the cost.

Applying for a motorcycle loan is generally straightforward, but it helps to know how the process works, including possible fees. This can help you avoid surprises.

Can you refinance a motorcycle loan?

It’s generally possible to refinance a motorcycle loan, similar to auto loans. “Refinancing a motorcycle loan can be beneficial when interest rates drop significantly, to improve creditworthiness, or extend the loan term for lower monthly payments,” said Trevor Williams, SVP of lending at Ascend Federal Credit Union. A higher credit score will typically result in lower rates.

To refinance a motorcycle loan, you typically replace your existing loan with a new one. Here’s how the process works:

1. Gather information: First, gather information pertaining to your existing loan, such as your loan contract, proof of information and motorcycle information.
2. Shop around and compare: With the necessary information in hand, compare refinancing offers from various lenders. Loan comparison tools can help you pre-qualify with multiple lenders without a hard credit inquiry.
3. Apply: Submit a refinancing application with your preferred lender after comparing and choosing the best offer.
4. Funding: The new loan will pay off the existing loan. Then, you’ll start making monthly payments on the new loan.

Refinancing a motorcycle loan can be the right choice under certain circumstances. For instance, you may qualify for a lower rate if your credit has improved since you first applied. However, you should consider the pros and cons, such as fees, the loan's long-term impacts and the total interest amount.

Pros and cons of a motorcycle loan

Motorcycle loans are typically more affordable and have lower interest rates than personal loans. However, motorcycles are depreciating assets, making it possible to owe more than the vehicle is worth. This is known as being “underwater” on the loan. Here are more pros and cons to consider before you apply.

Both types of motorcycle loans have pros and cons. Carefully weigh the pros and cons of each before moving forward.

» MORE: Motorcycle industry statistics by state

Motorcycle loan alternatives

“Despite their benefits, motorcycle loans aren’t right for everyone. Each method has pros and cons, and borrowers should carefully assess factors such as interest rates, repayment terms, their ability to pay back the loan and potential impact on credit scores before proceeding,” said Williams.

Savings

One of the simplest alternatives to motorcycle loans is to tap into your savings. The benefit of this approach is avoiding interest and fees and the potential to have your vehicle repossessed. However, this will also reduce the cash you have available for emergencies or other purposes.

Home equity loans or HELOCs

If you own a home, it may be possible to tap into your existing equity to finance your motorcycle purchase. This can lead to relatively low interest rates and allow you to qualify for a larger loan. However, it can be much riskier than a motorcycle loan because failing to make payments could result in losing your home.

Credit cards

Credit cards can be a low-cost way to finance a motorcycle purchase, especially if you have excellent credit. This may allow you to qualify for a credit card with a 0% introductory purchase APR. A 0% APR can be useful if you plan to pay off the balance quickly. However, rates can be high when the introductory period ends, so this approach is best if you expect to have cash available.