back to articles | May 15, 2023 | Staci Bailey

Categories: Auto Loans & Financing

6 Tips for Financing a Motorcycle For your Next Ride

There are some things you should be aware of before signing up for motorcycle financing. Read on for our top 6 tips and learn what you can expect when financing a motorcycle.


There are several options for obtaining motorcycle financing. Some financial institutions offer motorcycle loans which work much like car loans. Many motorcycle manufacturers offer financing options for their bikes. A third choice is to get a personal loan from any financial institution and use it to pay for your next ride.

Regardless of which option you choose from there are some things you should be aware of before signing up for motorcycle financing. Be prepared and set aside ample funds for insurance. Many lenders require that you maintain full coverage until the loan is paid off and you should factor this into your budget.

Motorcycle loans are more likely to be secured. This means that the bike will be used as collateral and the lender can take it if you default on your payments. Unsecured loans are harder to get approved and often have a higher interest rate but the lender can’t take your motorcycle.

Read on for our top 6 tips and learn what you can expect when financing a motorcycle.

1. Get Your Credit Score Into Shape

Your credit score will play a significant role in your financing options and offers. A higher score will give you access to better rates which can save you hundreds or even thousands of dollars over the life of your loan. Get your credit score as high as possible before you apply for motorcycle financing.

Make sure that you are familiar with your credit score and history. It’s a good idea to review your credit and check for any discrepancies on your record that may be affecting you negatively. In some cases it’s better to delay purchase and work on improving your credit score.

2. Set A Budget

Financing makes it seem that anything is affordable but if you’re not careful you may end up over extending yourself. Before you start looking at motorcycles, determine how much you can afford to pay each month for transportation. Be sure to factor in loan payments, insurance, fuel, repairs, and maintenance.

When you buy a motorcycle there will be some upfront costs such as the down payment, registration, licensing, and rider gear. Decide how much money you can comfortably afford to spend so that you don’t end up struggling. Avoid stretching yourself too thin as this can lead you to damage your credit score in the future.

3. Shop for Financing First

You’ll shop with confidence if you know exactly what you can spend before you set foot on a showroom floor. Once you know how much you are comfortable paying, the next step is to find out how much lenders are willing to give you. Much of this will be based on your credit score and financial details.

Good options for motorcycle financing include banks, credit unions, dealerships, and motorcycle manufacturers. As with most things, it’s smart to shop around. Online resources such as myAutoloan can help make this process simple by offering a convenient way to comparison shop.

The quote you get can vary significantly from one lender to the next. Not only do different lenders have their unique set of criteria, they also have different costs and fees. Make sure that you understand exactly what you are offered so that you can compare quotes accurately.

Obtaining an official pre-approval before shopping shows the dealership that you are serious and that you have your finances in order. This will put you in a stronger position when it comes to bargaining and you will be less likely to be swayed by pushy sales staff. You will still need to apply for the loan once you make your purchase but pre-approval will give you a great idea of your financing options before you commit.

4. Choose the Right Loan Term

The loan term is the amount of time it will take you to pay back the loan. While a longer term will decrease your monthly payments, most of the time it’s most economical to go with the shortest loan term possible. Loans with longer terms cost more in interest meaning that you will end up paying more over the life of the loan.

With a long loan term you might end up owing more than your motorcycle is worth. This is especially true if you have a smaller down payment which doesn’t cover depreciation and the cost of borrowing. Owing more than the value of the motorcycle can leave you in a particularly bad situation if you have to sell the bike or if it is destroyed.

5. Decide Between Fixed and Variable Rates

Make certain that you understand if the interest rate you are being offered is fixed or variable. In a fixed rate loan the interest rate doesn’t change and you pay the same amount every month. A variable rate loan is tied to the prime rate which means your interest can go up or down affecting your monthly payments.

There is a certain security in choosing a fixed rate loan. You’ll know exactly what to expect and your payments will always be the same making it easier to budget. Fixed rate is the best option during times when the prime rate is low or for borrowers who will need a longer term to pay off the loan.

Variable rate loans change with the market. When the prime rate is high it could be a better deal to go with a variable loan as the interest rate is likely to go down taking your monthly payments with it. These loans are not for the risk averse and are better suited for shorter loan terms.

One thing to note is the option to pay a loan off early. Ask what kind of penalties there are for early payoff before you make your decision. A variable rate loan acquired at a low rate is great if you can afford to pay off the balance before the interest rates go up. A long term fixed rate loan can be a good deal too if you can pay it off early.

6. Understand the Financing Agreement

Going through the process of buying your bike and securing motorcycle financing can be tedious when you’re looking forward to your first ride. It’s tempting to sign that agreement but first you must ensure that you know what you’re getting into. Read the entire financial agreement and make sure that you understand it.

Start by getting familiar with the different terms and language used throughout the agreement. Review the rates, fees, conditions, and expectations. If there is anything you don’t understand then you should ask.

If there is a discrepancy between what you were told and what is written in the agreement you need to bring it up before you sign. Insist on everything being correct before you put your name on it. This is not the time to get complacent so be meticulous.

If you want a good deal on your loan you will have to shop around. Compare offers objectively and understand what you’re signing up for. You’ll be enjoying your new ride in no time.