Besides the freedom and fun that riding a motorcycle can bring, riders love the fuel efficiency they offer over their four-wheeled, fuel-powered counterparts. Typically, 250cc-class motorcycles enjoy a 50-to-100-mile range per gallon of fuel. Of course, mileage varies based on the class and motorcycle type. A bike is a significant financial investment with an average cost of nearly $12,000 in 2021.
Learn the various methods for paying for your dream two-wheeler if you’re not paying for it with all cash. Use this guide to learn about motorcycle financing, how to finance a motorcycle, and tips for getting a loan for a bike so you can ride the road like a boss.
Secure A Motorcycle Loan
Similar to other vehicles, there are several ways to finance a motorcycle. Let’s look at how you can purchase your bike and stay within your budget and financial goals.
Motorcycle personal loans can be used to buy a new or a used bike. There are two main types of personal loans: secured and unsecured.
Secured loans
Secured personal loans are loans that don’t require you to put up collateral against the amount you borrow. Collateral is an asset you pledge as security and agree to turn over to the lender if you fail to repay the loan.
You might be asked to put down a down payment on a secured loan. However, along with not having to provide collateral, secured loans often feature lower interest rates than unsecured loans. Secured loans are typically given to loan applicants who have a proven recent history of being creditworthy.
Unsecured loans
Unsecured personal loans differ from secured loans in that you will be required to put up something as collateral, such as the motorcycle you’re financing, to secure the loan. If you fail to pay back the loan, you’ll have to relinquish your bike by giving it back to the lender to repay the unpaid loan.
Additionally, unsecured loans may require that you make a cash down payment on the loan. However, this can help you secure a loan in a lower amount that you might not otherwise qualify for.
For example, imagine that you want to finance a motorcycle that costs $10,000. Based on your financial picture, your credit history, and other factors, the lender may determine that you will be better able to pay back $8,000 and may require you to make a down payment of $2,000 to secure the loan.
Unsecured loans typically have higher interest rates than secured loans mentioned above. That’s another way that improving your credit score can help benefit you if it’s currently less than desirable.
Finance A Motorcycle Through A Motorcycle Dealer Or Manufacturer
Some motorcycle dealerships offer options for financing new and sometimes used bikes you purchase from their outlet. These are usually dealerships that sell well-known brands such as Harley Davidson, Honda, and BMW.
While financing through a dealership may seem like a convenient option for getting that bike a bit quicker, that instant gratification might cost you more. That’s because in-house dealership loans might cost you more in higher interest rates and added-on extra loan fees. Be sure to consider all your financing options to get the best deal for yourself.
Finance A Motorcycle With Bad Credit
While you may be able to secure a loan if your credit isn’t great, the loan fees and rates will likely be high. It’s usually best not to take out a loan with a car or motorcycle dealer that offers “buy here, pay here” purchase options. That’s because you may get a very high interest rate and loan fees.
Finance A Motorcycle With No Credit
What if you don’t have any credit history? You may still be able to buy a motorcycle, but you might want to consider whether you can afford one now. That’s because buying with no credit will likely cost you a lot — in terms of the interest rate you will be charged and the high loan fees you may incur. You may also be limited to purchasing very used or low-end bikes that may cost you a lot in repairs. We recommend implementing strategies that will help build your credit from scratch.
Lease A Motorcycle
Leasing a motorcycle is another option, but it’s not for everybody. It might be a good option if you only keep your bike for a short time or if you just want to try one out to see if it’s a suitable mode of transportation for you.
Lease payments can be lower than loan payments, but you won’t automatically own your motorcycle at the end of the lease period. If your credit is not great, leasing may be your only viable option for getting a bike. If you plan on owning your motorcycle for several years and know that owning a motorcycle is right for you, you’d probably be better off purchasing your bike with cash or securing a loan.
Other Costs To Consider When You’re Buying A Motorcycle
You’ll also want to take motorcycle insurance, riding class costs, and eventual repairs into account when you’re itching to hit the road on a new bike.
Motorcycle insurance costs and safety courses
When it comes to insurance, the smaller the bike as far as engine size, the smaller the insurance costs is the usual rule of thumb. Some insurance companies offer a break in insurance when you prove that you’ve taken a Motorcycle Foundation Safety (MSF) course. Because insurance rates tend to vary, it’s best to get a few insurance quotes before settling on one.
Motorcycle repair costs
Motorcycles require repairs to keep running smoothly, not to mention repairs from road spills and other accidents that can occur on a bike. If you don’t have the extra cash, consider taking out a personal loan to pay for repairs on which you can make monthly payments over time.
3 Main Steps To Get A Motorcycle Loan
Now that you know some of the various options available for getting a motorcycle, you probably realize that aside from paying all cash, personal loans can be a great, economical option in the long run. Here are a few steps for how to go about the process:
- Contact a reputable lender. You might want to contact a few to compare loan rates and repayment options to find the best deal.
- Check your credit report. Make sure your credit report accurately reflects your current credit history and get an idea about your current credit score.
- Get prequalified for a loan from a reputable lender. A qualified lending agent can review your current financial health, outstanding credit, and other financial factors and let you know what bike price range you should limit yourself to. Prequalification can also help expedite the lending process.
Finance The Purchase Of Your New Bike With Arizona Central Credit Union
Arizona Central Credit Union has best-rate, money-saving offers that can help qualified buyers get on the road to motorcycle freedom economically and fast. Applying for a personal loan is easy. Learn about available options or contact our Solutions and Center and lending teams today. Plus, there’s no obligation.
