Owning a motorcycle is a dream for those seeking open road and freedom. But navigating the roads of a motorcycle loan can be overwhelming. Don’t let the uncertainty of “where” or “how” to best finance your dream leave you stalled out. Most lenders offer complete online banking access so you can easily consider all your options from home. Whether you’re in the market for a new or used motorcycle, with a few tips and some careful research, you’ll quickly be on your way to finding the best loan.
Before applying for a motorcycle loan, first, determine your credit score. A good credit score will ensure a loan with lower interest rates. You can check your credit score through your credit card provider or a free credit report website. For access to competitive rates, your score should be no lower than 620. A good credit score enables you to apply for a loan through a credit union or bank, both of which offer the best rates. However, a bad credit score won’t keep you from obtaining a loan. There are alternative avenues. Just be prepared for financing your dream at higher interest rates.
If your credit score is less than ideal, you can get a motorcycle loan through the motorcycle dealership. Dealerships work with credit unions and banks, offering loans directly to their customers. Financing through the dealership is a convenient way to obtain both the motorcycle and loan in one stop.
However, there’s a price for convenience. Dealerships partner with outside lenders, giving them the flexibility to increase the APR and keep additional profits. When it comes time to finance your motorcycle, they may offer a loan that benefits them or includes unnecessary add-ons.
If your credit score has limited your financing options, it’s still important to shop around and fully understand all terms and conditions. See if there’s room to negotiate. Your credit score will not be affected by applying to multiple lenders, so don’t feel pressured to finance on the spot. If you’re being ripped off with unfair interest rates or dishonest lending practices, reconsider your options. You may want to work on improving your credit score first, rather than burying yourself in criminally high-interest rates.
Some motorcycle manufacturers have their own financing programs. If you need help getting a motorcycle loan, check with the manufacturer to see if their company offers to finance. This can apply to new, used, or private-party purchases—providing the manufacturer has its own financing company. Check with the dealer or with the manufacturer if it’s a private-party purchase. A simple online search to the manufacturer’s website will help you determine if they provide loans.
Not all banking is done traditionally. An alternative is online lending. Online lenders operate solely online, rather than through a brick-and-mortar branch. This is advantageous because you have access to countless options and are able to price compare for the best deal.
However, not all online lenders are reputable. Make sure you choose a trusted lender with a good reputation. Otherwise, you’ll be stuck with a lot of hidden fees and high variables. When you borrow money from a lender who operates online, you also run the risk of doing business with a fake lender. Look out for red flags, such as charging a fee for loan approvals. Don’t end up a victim of money loss or identity theft.
If you opt to take out a loan with an online lender, make sure you read reviews and check with the US Consumer Financial Protection Bureau for any complaints.
Credit Unions and Banks
If you already have an account with a credit union or bank, this is the most convenient avenue. They’ll have all your information on file and provide a more personal experience. Some may even offer a discount as part of a member loyalty program.
For even lower rates, consider choosing a credit union. Credit unions are likely to have the best motorcycle loan rates. Since they’re member-owned—unlike banks that are investor-owned and operated—they typically offer better deals. With no outside investors trying to capitalize on profits, they can lower their rates.
At Rivermark Community Credit Union, we offer the lowest rates around with an easy application process and no fees. Our services are highly rated and always personal. Whether you’re looking for a new or used motorcycle or want to refinance your loan from another lender, a credit union is likely to be the optimal choice.
When choosing a credit union or bank, make sure the institution specifically offers motorcycle loans. Motorcycle loans are secured loans. Since you’re putting something up for collateral, usually the motorcycle itself, it’s less risky for the lender and drives the rates down.
If you don’t want to risk using your motorcycle as collateral against the loan, you can opt to take out an unsecured personal loan instead. A personal loan will have a lower APR than a dealership or credit card but will still have higher interest rates than a secured motorcycle loan. Personal loans are a greater risk to the lender since they cannot repossess your property if you fail to make payments. However, if you have a poor credit score, this might be your best option.
Whatever your credit score or financial situation, owning a motorcycle doesn’t have to remain out of your grasp. With an understanding of your credit score, and the options available to you, you can apply for a loan that best fits your budget and get on that open road even faster.