back to articles | December 01, 2022 | Moses Mwangi

Categories: Vehicle & Buying Research

Do You Need Good Credit to Finance a Motorcycle?

Riding a motorcycle offers a feeling of freedom and some of the best experiences, such as the thrill or pleasure of cruising with your friend on an open highway. However, like everything in life, that thrilling experience comes with a price.


Riding a motorcycle offers a feeling of freedom and some of the best experiences, such as the thrill or pleasure of cruising with your friend on an open highway. However, like everything in life, that thrilling experience comes with a price. A new motorcycle for a beginner rider usually costs between $5,000 and $10,000, while for an experienced rider costs between 10,000 and $35,000. This is more than most people can be able to spend at once. Luckily, you can finance a motorcycle, but do you require good credit?

Technically no. There’s no minimum credit score required for a motorcycle loan, but it’s essential to have a good credit history and score. The higher your credit score is, the easier it may be to qualify for better loan terms and rates. Generally, a higher credit score will lead to a lower interest rate on your motorcycle loan, meaning you will spend less on interest charges over the life of the loan.

What credit score do you need to finance a motorcycle?

Most lenders need a credit score of 620 or above in order to get motorcycle financing. However, you can still find a lender to work with you if your score is below 620 but note that it could mean a higher interest rate. A credit score of 720 and above would help you get the lowest interest rate. However, sometimes lenders will offer special incentives that allow people with poor credit scores still get a relatively low-interest rate.

If you can’t secure a motorcycle loan due to bad credit scores, consider asking your spouse or relative to co-sign for you. Getting a co-signer that has a good credit history and score can boost your odds of securing a loan at a better rate.

Besides getting a co-signer, making a reasonable down payment can help if you don’t have any credit to finance a motorcycle. Putting down at least 20% or more of the loan amount will show the lender that you can have a large amount of the bike’s initial price paid for.

Furthermore, don’t include other accessories such as helmets, jackets, and gloves on your motorcycle loan since these will unnecessarily increase the total amount you owe. Instead, pay for the additional gear in cash and only finance the motorbike.

How to improve your credit score before applying for a motorcycle loan

Your credit rating significantly affects your interest rate for a motorcycle loan. Therefore, you need to boost your credit score before you apply for a loan. Here are a few practical tips to improve your credit.

1. Dispute errors on your credit report

Order a free copy of your credit report and review the document for errors and inaccuracies. Highlight any errors you discover that could be hurting your credit score. File a dispute through mail or online to one of the three major credit bureaus, Equifax, Experian, or TransUnion, reporting the inaccurate information. If the details in your report aren’t verifiable, they will be removed, and your score might improve.

2. Pay your bills on time

Lenders usually look at your payment history when reviewing your loan application. If your loan account or credit card is 30 or more days past the due date, a lender will likely report the default, which may negatively affect your credit score.

However, when you make timely payments on your credit card and accounts, your credit score might improve over time. It’s also important to update any past-due accounts to avoid further collection activity and damage to your credit score.

3. Don’t apply for new credit

Every time you apply for credit, a hard inquiry is generated, which can lower your credit score by a few points. While the impact is temporary, many inquiries within a short period might hurt your credit score. A slight drop in your score could lower your chance of a better interest rate, costing you several thousand dollars more.

4. Reduce your credit card balances

The FICO credit-scoring model usually favors borrowers that manage their debt obligations responsibly. Therefore, the amount of debt you owe is the second-biggest component of your credit score. Credit utilization (how much credit debt you have compared to your overall limit) plays a significant role in determining this.

The Consumer Financial Protection Bureau recommends keeping your credit utilization ratio at no more than 30%. If yours is higher than 30%, aim at paying off your balances to increase your credit score and be eligible for an affordable interest rate on a motorcycle loan.

5. Leave unused credit cards open

Leaving your unutilized credit card open can have a couple of benefits. It can help your credit utilization or improve your credit score if you have had the account for a while. Closing your credit card will generally reduce the utilization rate, meaning your credit score will be hurt.

What else do lenders consider to determine motorcycle financing?

Apart from credit score, a lender will consider other aspects when assessing your motorcycle loan application. The lender will want to know a few details about the financed motorcycle, such as:

  • Price of the motorcycle: Your potential lender will want to know how much you are paying for the new ride. Is it $10,000 or $35,000?
  • Value of the bike: A lender or creditor will compare how much a motorcycle is worth and the amount you are paying for it. This will help determine whether you are paying a reasonable price.
  • Age of the bike: The lender will also consider whether you are purchasing a new or used motorcycle. A new bike may cost you more, but it’s more likely to withstand wear and tear than a used motorcycle.
  • Trade-in: A lender may also consider whether you are exchanging an old bike for a new one. If so, your motorcycle’s trade-in value will be included in the lending equation.

The bottom line

A motorcycle can be an excellent alternative means of transport for weekend rides or commutes to work. However, before you fill your closet with gloves, leather jackets, and helmets, you should ensure your road to motorcycle ownership is hassle-free by checking your credit report and credit score. In addition, you should possibly raise your credit score in order to secure better loan terms and interest rates.