A motorcycle is an excellent alternative to a car if you want to save time in traffic or seek an adventure on the open road. But just as with cars, getting a motorcycle can also be expensive. If you currently do not have the money to purchase one, you can consider getting a loan for a bike.
This article will guide you on how to finance your loan and get the best deals from lenders.
What Is a Motorcycle Loan?
A motorcycle loan is a fund borrowed from lenders to buy a new or used motorcycle.
Lenders such as banks, credit unions, motorcycle dealerships, and manufacturers allow motorcycle financing for people who do not have money on hand to buy a unit.
For bank loan for motorcycle, they look into your credit score and financial capability before approving your application.
A good credit score is crucial in saving money for hefty interest rates. It is a deciding factor in how to get approved for a motorcycle loan. Lenders can give you lower interest rates if you have a high credit score.
How does financing a motorcycle work?
The question is, how do can you get a loan for a motorcycle?
Motorcycle financing works the same as car loans—you apply for a motorcycle loan with a lender, agree on terms, give a down payment on a motorcycle, and pay your monthly balance for a particular loan period.
However, in between this seemingly straightforward process comes some crucial steps you need to do to ensure that your motorcycle financing experience will end with a positive result.
These steps include having a good credit score, finding suitable lenders, and getting the best deals.
What do I need to finance a motorcycle?
Now that you know how motorcycle financing works, it’s time to gather the things you need to qualify for a loan.
- Credit score. Know your credit score and make sure you have a high score. As mentioned, this is essential in landing lower interest rates for your loan. You don’t have to worry about this matter if you have good standing.
- Downpayment. While you do not have a significant amount to buy a motorcycle, set aside a down payment on a motorcycle of 10-20 percent to put you in an equitable standing.
- Lender. Find a financial institution that can fund your motorcycle. Shop around for the best deals before deciding on a specific lender.
Is financing a motorcycle similar with financing a car?
Financing a motorcycle and financing a car has similarities. Both cases allow your lender to check on your credit score.
Having a good credit score is vital for more chances of approval. Lenders tend to see excessive debt as a red flag, resulting in the disapproval of your application.
The main difference between motorcycle financing and car financing is the loan amount for release.
Motorcycles are way cheaper than cars which can reach millions in total. The payment terms also differ, with lenders allowing motorcycle loans to be paid in 1-2 years while vehicles can take up to 60 months or five years before the repayment deadline.
Where can you get motorcycle financing?
When you dream of getting a motorcycle, the best way to finance a motorcycle is to save money to buy it in full.
However, if you prefer getting a loan, it comes with a big responsibility that you must adhere to avoid future financial woes.
Getting a motorcycle loan from a bank, credit union, or online lender
Banks, credit unions, and online lenders are the most common lender for motorcycle loans. You can get preapproval for a loan before you finally make the decision.
A pre approved motorcycle loan provides you an idea of the loan amount you can borrow, the interest rates, and the monthly payment you must comply with. Motorcycle loan preapproval allows you to shop and find the best deals within the preapproved price range.
Getting a loan from a dealership
A motorcycle dealership typically offers to finance. They are the middleman between you and the lenders for more accessible loan applications.
However, even when it seems a convenient way to have your preferred dealership handle the financing process, the interest rates and charges may be higher than a direct application to lenders.
Dealerships also offer another way and are more targeted at borrowers with poor credit—in-house financing.
Also, it comes with higher rates which may not be favorable for your financial situation,especially if you have unpaid debts from other financial institutions.
Getting a loan from a manufacturer
Motorcycle manufacturer also offers a loan. You have to inquire with your preferred manufacturer about their terms and interest rates before deciding on this option because they vary depending on their business regulations.
How to get a motorcycle loan
Now that you know where to get funding, it’s time to get a motorcycle loan.
Here is the process of how to finance your motorcycle.
Check your credit
Credit worthiness is an essential factor in getting qualified for a motorcycle loan. If you have poor credit, work on improving it a year or several months before you plan on applying for a loan. Make sure to pay your existing debts, such as credit cards and loans from other financial institutions. You can benefit from lower interest rates if you have good credit scores.
Decide which type of lender to use.
Choose the best lender with the best deals.
The factors you need to know are:
- The interest rates.
- The repayment period.
- Penalties.
- Pre-payment penalties.
- Additional charges come with the application process
Compare lenders and pick a loan option.
It is always best to compare lenders and pick the suitable scheme that aligns with your financial capability.
Fill out the application
Next, fill out the application form with accurate information. Submit any required documents, valid identification cards, tax returns, and other motorcycle loan requirements.
Get your funds.
Once you are approved, your lender can already sign for the loan and release of funds. Unsecured personal loans can take a week, while some lenders can release funds after one business day.
Can you get a motorcycle loan with bad credit?
Can you finance a motorcycle with poor credit score? Bad credit is not a good sign for lenders to approve your application. It is possible that your application will not be approved due to your credit score. However, some lenders still approve an application with poor credit, such as in-house financing from a dealership. The downside of this are additional charges and higher interest rates.
How can you get a better rate on a motorcycle loan?
To get a better rate for motorcycle financing, you need to build a good credit score. Improve your credit score for a period by paying your current debt and making sure you pay your bills and debts on time. If you plan to get a loan, forego applying for credit cards because this may negatively impact your credit score.
What’s the best Motorcycle loan term?
The ideal loan term for a motorcycle is 24 to 36 months. This period allows you to pay your loan with low interest. If you opt for 60 months, you will be paying more interest which can even lead to double the amount of the unit when bought in cash.
Get financing for your dream motorcycle
Choosing a trusted and reliable financing partner is vital to help you achieve your goal of owning a motorcycle.
Full Throttle in Houston, Texas provides fast and convenient motorcycle financing in just three ways—select a unit you want, fill out the application form, and make a downpayment. Instead of waiting for months to get a new bike, we offer you a fast approval process so you can get hold of your motorcycle in just days.
Are you ready to ride your dream bike?Contact us today to get started with your application.