How to Finance a Motorcycle

Be sure you can afford the terms before taking out a loan

Motorcyclist rounding a curve
••• Getty Images/WIN-Initiative

Even more than car owners and their cars, motorcycle enthusiasts tend to have a very strong emotional connection to their bikes.

The problem with such devotion is that is can sometimes get the better of you, as when purchasing the bike of your dreams. Before visiting your local dealer or checking the want ads, spend some time determining just how much you can realistically afford to spend and find out all you can on the best and most economical way to finance your motorcycle. 

Financing a Motorcycle Similar to Financing a Car

There are some differences between financing a car and a motorcycle, but there are more similarities, which really shouldn't come as a surprise. In both cases, you are buying a vehicle to get you around. In both cases, it's a pretty expensive proposition.

And in both cases, the lender will check your credit. If you are carrying a lot of credit card debt, consider waiting until you get it paid down before getting your bike. Lending money has a lot to do with taking a risk and that's especially true for motorcycle loans.

Lenders know that riding a motorcycle is more dangerous, and therefore riskier than driving a car, which in turn means more risk for the lender.

Shopping for the Best Motorcycle Loan

Almost all motorcycle dealerships offer financing to their customers. But they may be the most willing to work with you. Don't expect the best rates, however, and be sure that you read and understand completely the terms of your loan agreement.

Motorcycle manufacturers are another source of financing. They often offer special financing programs as part of their sales promotion efforts, particularly on newly introduced models or on models that are slow in selling. Always ask your dealer if there are any OEM (original equipment manufacturer) loans available on the models you are interested in. These options are, of course, for new bikes only.

One of the best places to seek out a loan is through a local bank or credit union. The rates and terms available are almost always better than you will receive from other sources.

There are several lenders that operate primarily online. Be sure to do a little homework to determine how credible they are and how they rate with their customers.

What to Avoid When Buying a Motorcycle

Taking out a loan with your home as collateral is something you should consider very carefully. Do you really want to put your home at risk for a new motorcycle?

Another bad idea: buying a bike with your credit card. If you have a high enough limit, the thought is tempting. It's easy to do, and there's no credit check if you already have the card. The factor that should stop you from doing it, though, is the high interest rates you'll be paying and the nasty penalties you'll get stuck with if you get behind on your payments.

The best-case scenario when buying a motorcycle or making any large purchase is to wait until you have the cash on hand to do so. But if you're determined to purchase a motorcycle, take the same care you would with any other big-ticket item; be sure you can afford the terms and can handle any payments.