- 1 How Much Does a Motorcycle Cost?
- 2 Why Use Motorcycle Loans?
- 3 A Few Things to Know
- 4 Motorcycle Loan Glossary of Terms
- 5 Your Basic Financing Options
- 6 Get a Motorcycle Loan with Bad Credit
- 7 Three Motorcycle Financing Companies to Consider
- 8 Motorcycle Financing FAQs
- 8.1 Q: How much money will I need for a down payment on my motorcycle?
- 8.2 Q: Do I need to work with a bank in order to finance a motorcycle purchase?
- 8.3 Q: What is a good interest rate for motorcycle financing?
- 8.4 Q: Can I get a motorcycle loan with bad credit?
- 8.5 Q: How many payments will I need to make on my motorcycle loan?
- 8.6 Q: Can a co-signer help me secure a motorcycle loan?
- 8.7 Q: Can I take out a motorcycle loan if I have other loans?
- 8.8 Q: How long does it take to get a motorcycle loan?
- 8.9 Q: What is a variable rate loan?
- 8.10 Q: Do I need to know which bike I want?
- 8.11 Q: Can I get a motorcycle loan if I’ve never taken out a loan before?
- 8.12 Q: Do I need a job to get motorcycle financing?
Riding a motorcycle is a thrill unlike any other. While non-riders sometimes struggle to understand the appeal of owning a motorcycle, it only takes one or two rides for most people to become hooked. Driving a car on city streets and country roads can quickly become monotonous, but that will never be the case on a great bike.
If you have long dreamed of owning your own motorcycle, or if you are simply hoping to upgrade to a better bike, this guide is all about securing the financing you need to make the purchase. Just like when buying a car or truck, you can use financing to make your motorcycle ownership dreams a reality. Of course, it’s a good idea to arm yourself with some basic knowledge before going into the buying process, so we hope this guide helps to point you in the right direction.
Disclaimer: Before getting started, we must note that this article is for informational purposes only. This is not meant as formal legal or financial advice. Any decisions made regarding the financing of a motorcycle are yours and yours alone. Additionally, MagicBike.net makes no guarantee as to the accuracy of the information contained in this guide.
How Much Does a Motorcycle Cost?
Before we get into the main topic of motorcycle financing, let’s first talk about how much you can expect to spend when buying a new or used motorcycle. On the new side of things, prices will vary wildly, depending on the make and model you select. If you are trying to buy a bike on a tight budget, it’s absolutely possible to stay under the $10K mark for this purchase. Models from well-known names like Suzuki, Ducati, Campagna, and others are available for less than ten grand. One of the great things about buying a motorcycle is that you don’t have to spend a fortune to get a reliable machine that will be fun to ride.
Of course, if you’d prefer to open the wallet up a bit further to get a high-end bike, plenty of manufacturers are ready to serve you. You’ll see plenty of bikes in the $15,000 – $30,000 range, with brand names including Harley-Davidson, BMW, and more. You may get more power when you move up to a more expensive bike, or you may upgrade for additional features and technological touches.
The best way to get a feel for the motorcycle market is simply to browse around for yourself. You can browse either by visiting a local dealer in person or by exploring the web. Either way, it won’t take long to gain an understanding of how far your money will go and what you can get at the various price points. As long as you know what kind of bike you want, you’ll soon see how much it is going to cost to make that dream a reality.
Why Use Motorcycle Loans?
When you are planning to buy a motorcycle, there are two basic options available to pay for the purchase – cash or financing. Of course, when we say ‘cash’, we don’t literally mean a big pile of currency that you drop on the table like you are playing poker in Las Vegas. Although, that would be pretty cool. Rather, ‘cash’ in this sense just means that you are paying for the purchase with your own money, and not taking out a loan from a bank or other entity.
So, should you pay cash for this kind of purchase, or is it better to use motorcycle financing? Well, it’s easy to understand the appeal of paying cash at first, but a closer look reveals that a motorcycle loan has plenty of advantages. In fact, for the vast majority of motorcycle buyers, using a loan will be the best way to go. Let’s take a look at a few of the benefits associated with the financing option.
- Make the purchase sooner. This is a big one. If you are going to pay cash for your new motorcycle, you’ll need to wait until you have saved up enough money for the purchase before you can actually take ownership and start to ride. That wait can be frustratingly long, and you may miss out on many years that could have been spent enjoying riding with friends on beautiful roads. By opting for a loan, you can push up this timeline significantly. Instead of waiting until you have all of the money, you can get started quickly and pay the motorcycle off month by month until the loan is satisfied. You will still want to make sure your finances are sufficiently in order to take on the loan, of course, but for the majority of people opting for a loan will make it possible to own a motorcycle years before they could have otherwise.
- Maintain some savings. Even if you do have enough money in your bank account to buy a motorcycle, spending most or all of that money on the purchase of your bike might not be the best bet. It’s nice to have at least a modest amount of savings collected in the bank, so you can use financing to maintain your savings and still buy your bike. If you do have a healthy savings account, you might decide to use some of that money for a down payment, while retaining most of it for future use. With that plan, you can bring down the size of the loan to keep your monthly payment amount in a range where you are comfortable.
- Get the bike you want. If you were to pay cash, you might have to settle for a motorcycle that isn’t quite what you had in mind. Don’t rush into a cash purchase only to find a few months later that you wish you would have waited to get a better bike. This is a purchase that you are likely to be using regularly for years to come, so get what you want right from the start and have no regrets.
- Find great rates. With so many options for motorcycle financing today, you shouldn’t have much trouble finding a great interest rate for your purchase. The exact terms of your loan will depend on a long list of factors, such as your credit rating, down payment amount, cost of the bike, and more. Before you take out any loan, always shop around for rates to find the best deal. If you are able to secure a low interest rate, you’ll get to spread out the payments for your bike without having to spend too much on interest charges.
To be fair, for some people, buying a motorcycle with cash will be a perfectly reasonable choice. However, that will only work for some people, while many others will find that financing their motorcycle is the easier and more appealing option. Take some time to think through these two options to determine which is going to be the right path for you.
A Few Things to Know
Have you ever financed the purchase of a car, truck, or motorcycle before? If not, you might be a little intimidated about what the process will require, and how it will go once you visit a dealership. The process will be a bit different from dealer to dealer but knowing what to expect when going in will help you feel comfortable and confident enough to ask important questions.
Since it is the process of heading to a dealership and making a purchase that makes many first-time buyers nervous, we’d like to hit on a few key points that you should understand.
- There won’t be much talk about money at first. When you arrive at a bike dealer and start checking out some of the models they have available, don’t be surprised if your salesperson doesn’t want to talk much about money initially. His or her job is to make you fall in love with a bike that you decide you simply can’t live without – they are salespeople, after all. You are certainly free to ask about the financing process, but most of their effort is going to be focused on getting you to commit to a motorcycle before moving any further.
- The sticker price is just the start. One of the big issues that many people run into at any kind of dealership is the upsell process. The dealer doesn’t want to sell you the motorcycle alone, as they’ll likely also want to sell some kind of additional warranty coverage, various upgrades for the bike, etc. These upsells are where the dealers make a lot of their money, and they are also how you can turn a $15,000 bike into a $20,000 purchase. That’s not to say that all of these offers are bad deals, but you need to consider them carefully. One important thing to remember is that you should be in charge of this process – it’s your money, after all. If the dealer isn’t giving you what you want, just go to another one. There will always be someone out there willing to sell you a motorcycle.
- It can take a while. If you do pick out a bike and get started on the financing process, be prepared to be there for a while before you can ride away. This is particularly true if you decide to use dealership financing (more on that later). It’s not necessarily a problem that it will take a while to close the deal, but it is good to know in advance so you can plan accordingly and not have your day thrown off by spending several hours at the dealership.
In the end, there is no need to be intimidated here, because you are the one that’s in control. It’s your money, it’s your purchase, and you should have the final say on everything. Not sure about the deal? Walk away and come back another time. You need to be comfortable before you sign anything, and as we stated above, there is always another dealer if the first one you choose isn’t treating you right.
Motorcycle Loan Glossary of Terms
There will be a lot of terms tossed around when you get ready to take out a loan to purchase a new bike. It’s important that you understand what each of these terms mean, so you don’t end up agreeing to something that doesn’t really work for your needs. In this section, we are going to highlight many of the key terms that you will need to know, along with a quick explanation for each. In the end, you’ll see that this topic isn’t so confusing after all, and you should feel more prepared when you are ready to take the next step in the process.
|APR||When you see the letters APR on your financing paperwork or offer, this refers to annual percentage rate. Simply put, a lower APR is better than a higher one, since this rate indicates the amount of interest you will pay on the loan. Even relatively small differences can mean big savings. For instance, moving down from 7% to 6% is quite beneficial, so it’s worth fighting for every percentage point you can find.|
|Borrower||That’s you! You are the individual asking to borrow the money, so you may see yourself referred to as the borrower on some paperwork.|
|Lender||As you might imagine, this is the entity that is going to lend you the money to buy the bike. We will talk more about the lender options in the next section, but for now just understand that it’s important to know who is actually funding the loan.|
|Terms||This is how long the loan will last before it is paid off. For a car, 60 months is a common loan term, but motorcycles frequently have shorter terms since they may not be as expensive as a car. You might be able to move your loan payments down by extending the term of the loan, but you will wind up paying more interest as a result. As you work through your financing options, see how changing the term of the loan alters the various other factors.|
|Monthly Payment||The amount that you will be expected to pay each month once the loan is active. You’ll need to make this payment in a timely manner each month until the loan has been fully satisfied.|
|Down Payment||Most likely, you’ll need to bring at least a little bit of your own money to the table to make this deal happen. The amount of upfront money you provide is known as your down payment, and it will play an important role in securing your loan.|
|Principal||This is the final amount of the loan. As an example, let’s say your motorcycle purchase is going to cost an even $20,000, including taxes and everything else. If you decide to make a down payment of $5,000, that will make the principal amount of your loan $15,000.|
The key thing to know about the various terms you’ll encounter in this process is that it’s important to ask questions. Don’t be in a hurry, and feel free to ask about anything you don’t understand. That way, you’ll know exactly what you are getting into, and you won’t be surprised later on when it’s time to start making payments.
Your Basic Financing Options
To get a motorcycle loan, you’ll need a lender. That might be a little obvious, but you might not know that many different entities can wind up playing the role of lender for your purchase. Generally speaking, there are four different possibilities for where you will turn for a loan :
- Dealer financing
- Manufacturer financing
- Online lending
- Bank or credit union
As you might imagine, there are some pros and cons to each of these options. Online lending is a newer space, of course, but it offers a number of great benefits that you should carefully consider. Later in this guide, we are going to take a close look at some online lenders so you will have a place to start your search if you decide to go in that direction. For many buyers, starting out by working with an online lender or two is a great way to kick off the process and start to work toward a motorcycle loan.
Financing the purchase of a motorcycle directly through the manufacturer of that bike will possibly lead you to the best deal of all in terms of a low interest rate. Unfortunately, you will need to have quite a strong credit portfolio to qualify for this kind of financing. If you don’t have great credit, you can probably cross this option off your list early in the process. However, if you have a high score, it might be worth checking into to see if you can land a low rate.
As another option, you can go directly to the bank or credit union that you use to handle your money on a day to day basis and ask them about financing the purchase. One of the nice things about taking this approach is that you will already have an established relationship with this institution, and they will already have a lot of the information they need. You’ll be able to go in and directly talk to an employee who can walk you through the process and explain what rates they have to offer. It is worth pointing out that your bank or credit union might not offer motorcycle loans. There are plenty that do, but some don’t – so check on that point in advance before you use any of your valuable time trying to go in this direction.
For many people, financing the purchase of a motorcycle means going to the dealer and asking them to find a loan. That doesn’t necessarily mean that the dealership will be directly funding the loan – rather, they will collect all of your information and put it out to various lenders to see what they can offer. They’ll find the best deal out of those offers and present that to you as a financing option. Since this is such a popular approach to financing, let’s take a bit of a closer look at some of the pros and cons.
|It’s easy. You don’t have to do anything ahead of time for this option. You just head to the dealership, start looking at bikes, and get into the financing process if you pick out one that you like. Sure, it can take a few hours to get it done, but for the most part this option requires you to do very little.||Might not get a great rate. If you go into the process without having done your homework, the dealership might not be particularly motivated to work for a great rate. Agreeing to a loan with a somewhat high interest rate can wind up costing you a lot of money in the long run.
|Bring some competition. You can turn the tables in your favor a bit by coming into the dealership with some other offers already in hand. In other words, you could head to your bank in advance to get a loan approval letter that you can show the dealership as part of the financing process. That way, the dealership will know they need to beat a certain offer, or you will just go with what your bank can provide.||Upselling. Knowing that you are going to use financing through their network, the dealer may work even harder to tack additional items onto the final bill. Some people won’t have any problem saying no to these upsell attempts, but others will find these tactics difficult to turn down.
There is no one perfect way to go about getting funding for your bike purchase. Consider all of the potential choices and pursue the one that is going to get you the best deal in the end.
Get a Motorcycle Loan with Bad Credit
At this point, you might be thinking that financing the purchase of a motorcycle sounds pretty good – but will it be possible with bad credit? If your credit history is somewhat less than stellar, you already know that it can be harder to secure financing that it is for someone with a high credit score. With that said, you don’t want to give up on this possibility before you give it a try. It might be possible to get a loan after all, you just may have to put in a little bit of extra work to make it happen.
First, you will want to be sure to work with a company that specializes in offering financing to those with low credit scores. Some financing companies are happy to work with these kinds of lenders, while others limit their services to higher credit score customers. You’ll save yourself some time and frustration by researching lenders in advance and only pursuing those who will be likely to help out someone with past credit issues.
In addition to working with the right lender, another good step would be to work toward improving your credit to make you more attractive as a borrower. Even small steps can wind up making a big difference as you try to get approved. Some of the basics that may help your credit situation are listed below. However, the right steps for you will depend on your individual situation, so be sure to consider all factors before moving forward.
- Pay down existing debt. Carrying a significant amount of debt is going to weigh down your credit score. For instance, if you have a total of $10,000 in credit lines open – and $9,000 of that credit is being used, your score is likely to be lower than it would be otherwise. If you can pay down some of that debt and lower your overall credit utilization, you should experience an improvement in your credit profile. Obviously, you might not have the money available right now to pay down your debt, so it might be necessary to save up for a while. If you are able to save some cash, you can pay extra beyond the minimum required payment on your credit account each month. Monitor the impact that this has on your credit and decide when the time is right to pursue your loan.
- Make sure it’s right. Mistakes happen on credit reports more often than you might believe. Even if you know your credit isn’t great, it’s worth requesting a free copy of your credit report to make sure it doesn’t contain any errors. If you find that something is amiss on your credit report currently, having that mistake corrected could provide you with a nice bump in the right direction with regard to your score. Even a small improvement could mean the difference from being declined and being accepted, or it could allow you to secure a better rate. It won’t take much time and effort to complete the step, so be sure to check this one off early in the motorcycle shopping process.
- Don’t make any mistakes. It’s easy to get caught up looking backward with regard to your credit score, but it’s even more important to look forward. In other words, don’t make any further mistakes that are going to drag your credit down in the wrong direction. If you miss payments on some of your current accounts, or run into other sorts of financial trouble, it may become impossible to get the loan you need to buy a new motorcycle. If you can handle all of your financial obligations properly month after month, the rough credit of your past will slowly start to fade away.
- Bring a healthy down payment. One of the best things a bad credit buyer can do when trying to get a loan is to bring a notable down payment to the table. If you are willing to put your own money on the line when signing for the loan, that will indicate to the lender that you are serious about the deal and less likely to leave them high and dry. What lenders are trying to determine when giving out loans is who will pay them back in full. If you don’t put any money down, or only put a very little money down, the lender may be concerned that you will disappear on the loan and the only harm that you will suffer is the damage to your credit score. On the other hand, if you do make a meaningful down payment – like a couple thousand dollars or so – you’ll be seen as less likely to default on the loan (since you would be out that money). If you want lenders to take you seriously and work with you on this deal, be sure to save up enough money to make a decent down payment.
Is it going to be easy to get a motorcycle loan with bad credit? Not necessarily – but you shouldn’t assume that it will be impossible, either. If you are willing to put in some effort on improving your score, and if you pick the right lenders to contact, you might be able to get this done.
One more important point to make about getting a motorcycle loan with bad credit is this: taking out and repaying the loan could help your credit over the long run. For instance, imagine you want to take out a mortgage to buy a home at some point in the future. That’s going to be tough to do with bad credit but paying your motorcycle loan on time for a couple of years should help move your credit score in a positive direction. If you can prove that you are able to take on this loan successfully and pay it back, you might earn the ability to take out an even larger loan later on.
Three Motorcycle Financing Companies to Consider
There are plenty of companies out there willing to work with you on a motorcycle loan. By working on your financing before you head out to look at bikes, you can have a good idea of what you can afford. Also, if you have offers in hand for financing, you will have a great opportunity to negotiate with the dealership successfully. It doesn’t take long to get started on this process, and doing so right away can take you a big step closer to owning a bike.
To get you started, we have highlighted three popular options below. While the final choice will be yours, of course, take a moment to get familiar with these options and think about which may be best for your needs.
LightStream is one of the leading names in the online motorcycle lending space. If you were to look into this market on your own, it’s likely you would find LightStream early on in your search. Right from the start, you’ll see that LightStream is focused on delivering a customer-friendly, simple experience. If you are worried about dealing with mountains of paperwork and endless forms before you can receive a loan approval, those worries are set to the side with LightStream.
Competitive Interest Rates
For starters, you will want to evaluate the interest rates that are offered by any lender you may work with. For LightStream, rates are available starting in the low 4% range and going up from there. As we have already discussed in this guide, the rate you are able to receive for your loan will depend on many factors. While some loans with LightStream will be eligible for rates under 5%, some will go up above 10%. In addition to your own credit history, the amount of the loan and the term of the loan will have an impact on the rates that you are offered.
One of the interesting elements involved with borrowing from LightStream is their Rate Beat Program. If you secure a loan offer from another lender, LightStream will offer you a rate that is .10% lower than that rate. So, if you already have a good offer in hand from another lender but would like to see what LightStream can do for you, it’s worth contacting them to discuss your options.
Time is On Your Side
In an ideal world, you would be able to plan well in advance of your motorcycle purchase, securing a funding offer long before you actually want to buy the bike. This is not an ideal world, however, and sometimes you need to do things in a hurry. If you are in a rush, LightStream might be able to help. In fact, for some borrowers in certain circumstances, it’s possible to fund a loan the same day that you submit your application.
Even if you aren’t quite able to complete your loan the same day that you file the application, you should still enjoy a quick and responsive experience with LightStream. This is one of the reasons to work with an online lender in the first place. By using technology to their advantage, the process tends to be quicker than an ‘old school’ bank may be able to offer. Once you have your lending offer in hand, you can go shopping with confidence to find the bike of your dreams.
A Wide Range of Loan Amounts
You won’t be limited when it comes to loan amounts when you shop at LightStream. If you are buying a budget-minded bike, you will find that they offer rates for loans in the $5,000 – $10,000 range. On the other end of the spectrum, loans in excess of $50,000 are available to those who qualify. So, if you aren’t quite sure yet where on the spectrum your bike purchase will land, LightStream is a good place to start your hunt for a competitive rate.
A Good Option for Good Credit
The competitive rates provided by LightStream are available to those with credit in the good to great range. If you have a strong credit score and a history with very few blemishes, this may be an appealing option. With that said, those with poor credit might want to look elsewhere, as this lender tends to focus on working with borrowers who have a good credit history overall.
Streamline the Buying Process
If you are like most motorcycle buyers, you probably want to spend as little time at the dealership as possible when buying your bike. You want to find the model that works best for you, complete the deal, and head out with your new wheels. Fortunately, going with LightStream is a good way to make things at the dealership as easy as possible.
Rather than coordinating the payment with your dealer, LightStream will simply deposit the money for the loan directly into your bank account. At that point, you become a cash buyer and you are able to pay the dealership for the cost of the bike without doing any financing work on that end of the transaction. So, when the dealer asks if you need to work on financing, you can just say ‘no’ and move on to complete the deal.
While every situation is a little different, you might even be able to negotiate a better price when you can produce all of the money necessary for the purchase right there at the time of the sale. At the very least, the dealer will take you seriously from the start if you have the money ready and available to buy a bike.
A Quick Summary
LightStream is a division of SunTrust Bank and is a leading option for an online lender for those looking to purchase a motorcycle. Aimed at borrowers with a strong credit profile, LightStream offers competitive rates, a simple application process, and the potential to fund a loan in a single day. With so much to offer, it’s easy to understand why LightStream has become so popular in the online motorcycle lending space.
Another option to consider in your search for the right motorcycle loan is myAutoLoan. Just like with LightStream, it’s possible to get a great offer for a loan when you opt for myAutoLoan, although the process will look a bit different. Rather than offering you a loan directly, myAutoLoan will work with their lenders to present you with a variety of offers. You will get up to four offers after you submit an application, and you’ll be able to pick from those in order to select the right funding source for your needs.
By presenting you with multiple loan offers, you will have the opportunity to select the one that is the best fit – and that doesn’t necessarily mean you’ll end up going with the one with the lowest rate. While a low interest rate is always a good thing, there are other factors to consider. Specifically, the term of the loan is an important element, as this plays a big role in how much you will pay each month. If you are looking for a longer term to spread out those payments, you might be willing to accept a slightly higher rate in exchange. Thanks to the system that myAutoLoan uses, it will be easy to compare multiple offers in a time-effective manner.
An Appealing Choice for Bad Credit Shoppers
If you already know that your credit is somewhat less than stellar, you’ll want to give yourself every opportunity to find the right motorcycle loan. That’s why getting more than one offer makes so much sense. With a low credit score, not every lender will be willing to work with you – but some will. Going through myAutoLoan presents your application automatically to multiple lenders, and hopefully at least one of them will be able to offer financing that suits your needs. This is no guarantee of a successful outcome, of course, but getting more than one offer does increase your odds of success.
Efficiency at Every Turn
One of the main motivations for pursuing online financing is to save time and hassle as compared to more traditional methods of getting a loan. Using myAutoLoan will certainly leave you in good hands on the efficiency side of things. By filling out just a single form, which should only take you a couple of minutes, you’ll be well on your way to getting multiple loan offers. In most cases, those offers will be delivered in just minutes, so you can begin reviewing your options almost immediately.
Speaking of being efficient, it’s a good idea to collect all of your important information before you get started filling out any form. If you have what you need right in front of you, it will be quick and easy to enter all of the info and then wait for your offers to roll in. Some things you will know off the top of your head, such as your address and Social Security number, but you might have to track down documentation for other things like income levels and current debts.
No Upfront Cost
Considering the fact that you are getting ready to spend a lot of money on a motorcycle, it’s nice to save anywhere you can for the time being. When you through myAutoLoan to find offers for financing, you won’t have to spend anything upfront to see what they can provide. As long as you have the necessary information available to fill out the form, you can request offers at no charge to you.
Making Life Easy
You have a busy life away from trying to get funding for a motorcycle purchase, so don’t make things any harder than they need to be. Instead of running around to various financing options for loan offers, let myAutoLoan do the running around for you. It will only take a short amount of your time, and if you qualify, you should have multiple offers to consider in just a matter of minutes.
The last motorcycle loan option we are going to highlight is USAA. If you join USAA, you will have access to a variety of products beyond just loans, including insurance, banking, and much more. In terms of motorcycle financing, you may have access to competitive rates, special offers, and a simple loan process.
An Important Point to Get Started
Before you go any further, it’s important to understand that USAA membership is not open to everyone. In order to qualify to become a member, you must be a U.S. military member, or an eligible family member. Without this service qualification, you will not be able to turn to USAA for help in the motorcycle financing process. Of course, if you don’t qualify for USAA, there are still plenty of other places to turn, such as the two options we have listed previously.
If you do qualify and you decide to join USAA, you’ll be able to access the variety of products they make available to their members. For instance, once you have financed your new motorcycle and taken ownership, you might decide to secure insurance for the bike through USAA, as well. With so many products available, you could simplify the financial side of your life by turning to USAA for help with various needs.
Possibility of Full Financing
One of the many things USAA can offer you is the possibility of financing the entire purchase price of the bike. If you don’t have a lot of cash available for a down payment at the moment, or if you would just like to hang onto that cash for something else, look into the possibility of financing the whole thing. Or, at the least, making the purchase with only a small down payment, so you can keep as much of your cash as possible in your pocket.
It’s important to note that with most full financing offers, you will need to bring a strong credit history to the table. For those with a lower credit score, it is often the presence of a healthy down payment that moves their loan application into ‘approved’ territory, so financing the entire price of the bike might not be possible if you have a score on the lower end of the spectrum. Of course, you can always ask for a review of your options to see what is possible before you make a final decision.
Check Out Discount Offers
There are plenty of benefits associated with becoming a USAA member. One of those benefits is access to special offers that might not be available to the general public. So, not only could you get a solid loan offer with a competitive interest rate and suitable term, but you also might be able to get a better deal on the bike itself. Keeping the price of the bike down is a big piece of lowering your monthly payment and making this purchase as affordable as possible.
Need to Refinance Your Existing Bike?
Throughout this guide, we have been talking about how you can find a loan for the purchase of a new motorcycle. But what if you already own a motorcycle and simply need to refinance it to get a better loan? That’s something you can pursue with USAA, as well. The process is relatively similar to the loan origination process, so you can get started right away if you are already a member.
Why would you want to refinance the loan you have out on your bike currently? Most likely, your motivation for refinancing would be to move away from unfavorable loan terms. For instance, let’s imagine you took out a loan to buy the bike a couple of years ago, and you had poor credit at the time. As a result of that poor credit, you may have had to accept a high interest rate on your loan. In the last two years, you have paid down some debt and improved your credit score significantly. By refinancing with a better credit score behind you, it should be possible to lower your interest rate and start saving money right away.
A Great Option for Those Eligible
There is a lot to like about financing a motorcycle purchase through USAA – assuming you are able to qualify. If you are a service member, or a qualifying family member, joining USAA will present you with some exciting services and opportunities. Joining USAA would likely be about more than just getting this motorcycle loan, although that might provide you with some good motivation to get started. If you do qualify to join USAA, take a closer look at what they offer before you decide how you’ll move forward to buy your bike.
Motorcycle Financing FAQs
To help provide you with quick answers to some of your pressing questions, we are happy to offer this FAQ section. Some of the answers provided below can be found in the content throughout the rest of this guide, but this section offers you a quick and easy way to straighten out any confusion you might be having about this process. Let’s get started!
Q: How much money will I need for a down payment on my motorcycle?
A: Unfortunately, there is no easy answer for this question, since every buyer and situation is unique. For some buyers with strong credit, it might not be necessary to make any down payment at all – or they may be able to put down just a few hundred bucks. On the other hand, if your credit profile is lacking a bit, you might need to bring more money to the table to get a lender to work with you.
Q: Do I need to work with a bank in order to finance a motorcycle purchase?
A: Not necessarily. While working directly with a bank is one way to go, there are other options on the table. For instance, you can go through the dealer for your financing, and they will contact a variety of financial institutions on your behalf. You could also use an online lender, which is an option that has become more and more popular in recent years. Finally, you might even be able to finance the purchase of your motorcycle directly through the manufacturer of that bike (although you’ll usually need an excellent credit score for that option).
Q: What is a good interest rate for motorcycle financing?
A: Yet again, the answer to this question is going to vary from person to person. What represents a good rate for you might not be possible for someone else, depending on your respective credit scores. With strong credit and a healthy down payment, it’s certainly possible to find a rate in the 3% – 4% range. On the other hand, less-qualified buyers may need to deal with a rate over 10% in order to be approved for a loan. The key here is that you are able to afford your monthly payment, and that you shop around to find the best possible rate before you accept any offer and sign on the dotted line.
Q: Can I get a motorcycle loan with bad credit?
A: It’s absolutely possible, though not always easy, to get approved for a motorcycle loan with a low credit score. Things that will help you achieve this goal include working with the right lender, saving up a meaningful down payment, and addressing any issues on your credit report that you have the ability to change. With some effort and determination, you very well may be able to land your loan in the end.
Q: How many payments will I need to make on my motorcycle loan?
A: This will depend on the stated term of the loan. So, for instance, if you have a 36-month term on your loan, you’ll need to make monthly payments for three years before the loan will be satisfied. This is a relatively common term for average bike purchases, but you might be able to stretch out your loan to a five-year term if you need to lower the monthly payment amount.
Q: Can a co-signer help me secure a motorcycle loan?
A: It’s possible that you will want to consider the use of a co-signer to make it easier to get approved for your loan. Basically, a co-signer is someone who is ‘backing you up’ on the loan, giving the lender another option to recoup their money if you stop paying on the loan. Often, it will be parents or other family members who serve as co-signers. Before you consider this option, discuss the possibility with your lender or a few lenders to learn more about how it works and whether or not it will help in your case. Those with a limited credit history might enjoy a boost from a co-signer with strong credit, but the details will vary.
Q: Can I take out a motorcycle loan if I have other loans?
A: There is no reason you can’t have more than one loan out at a time, although you’ll need to consider your overall debt load as compared to your income level. This is an important calculation that lenders are likely to perform as they evaluate whether or not to give you a loan. For instance, let’s imagine that you make $5,000 per month. Currently, you have a mortgage payment of $1,000, a car payment of $300, and credit card payments of $100 per month. That means before taking out a loan for a motorcycle purchase, you have $1,400 of debt payments already in place, which is 28% of your total monthly income. Now, let’s say your motorcycle loan payment would be an additional $200, pushing you to $1,600 for each month, and 32% of your income. That’s still a comfortable level that most lenders would be happy with, assuming the rest of your credit application is in good shape.
Q: How long does it take to get a motorcycle loan?
A: As is so often the case with financing questions, it’s going to depend on a number of factors. If you go into a dealership hoping to buy a bike, they will work hard to secure financing for you on the same day that you apply. Likewise, some online lenders can provide you with a same-day turnaround if the conditions are right. Even if you can’t get your loan on the same day that you apply, it shouldn’t take more than a day or two to get the deal done in most cases.
Q: What is a variable rate loan?
A: As the name would indicate, a variable rate loan is one where the interest rate attached to the loan can change over time. This is the opposite of a fixed rate loan, which has a single interest rate which is guaranteed not to change for the duration of the term. Most motorcycle loans are fixed rate, as this allows the borrower to know exactly how much they will need to pay back month after month, until the loan balance has been satisfied. With a variable rate loan, the rate might be low at the start, only to climb much higher later in the term. This arrangement can cause problems if the payment becomes more than the borrower can handle toward the end of the loan. As you shop, you’ll want to look primarily at fixed rate loans for the security and predictability that they offer.
Q: Do I need to know which bike I want?
A: Maybe. For some loans, you will be able to simply get a letter stating that you have been approved for a certain amount, and it won’t be necessary to identify the bike. On the other hand, applying for other loans may require that you already know what you would like to purchase, how much it will cost, etc. It’s a good idea to gain a basic understanding of the motorcycle market before you start looking for financing, just so you can be relatively confident regarding the approximate cost of your bike. For instance, you might not yet know the exact price, but it will be helpful to know if you are shopping in the $15,000 range or the $25,000 range. Even doing just a bit of research on the bikes you are interested in and how much they cost will go a long way.
Q: Can I get a motorcycle loan if I’ve never taken out a loan before?
A: Absolutely – as long as you meet the qualifications for the loan. In fact, a motorcycle loan could make a great starting point if you’d like to build up your credit and be able to borrow more money in the future. For instance, if you have not borrowed before, you might decide to take out a $5,000 loan to buy a modest bike. As long as you pay that bike off in a timely manner, you should improve your credit and find it easier to get a larger loan later on. One issue to watch out for is if you don’t have much of a credit history at all, a lender might want a co-signer on this first loan. That won’t always be the case, but it’s something to keep in mind in case it does come up.
Q: Do I need a job to get motorcycle financing?
A: Most likely, yes. Although, it would be more accurate to say that you need a reliable income source. That doesn’t need to be a job necessarily, but that will be the case for most people. You will need to demonstrate to the lender that you have the ability to pay back the loan. In the case of a job, it will be helpful if you have worked at the same place for a decent amount of time, and you have a solid employment history. If you have long stretches of unemployment in your past, there may be additional questions from the lender that you’ll need to answer. Also, if you make money outside of a traditional employment setting, such as working freelance or owning your own small business, you might need to produce extra documentation to secure financing.