What Should I Know About Motorcycle Financing?

Ken Black

Many consumers may not be aware of any differences between motorcycle financing and auto loans. However, those differences do exist and being aware of them could mean the difference between getting a good deal and paying much more for a motorcycle than you may normally have to. Whether it is through a local company or corporate conglomerate, getting a good deal on motorcycle financing often depends on the work one puts into it.

In many ways, financing the purchase of a motorcycle is similar to doing so for a car.
In many ways, financing the purchase of a motorcycle is similar to doing so for a car.

Motorcycle loans, in some ways, are the same as car loans. Those who decide to finance using the value of the motorcycle as collateral will find the process very similar. There will be application forms and an approval process.

Interest rates might be higher for motorcycle loans than car loans.
Interest rates might be higher for motorcycle loans than car loans.

Motorcycle financing using these traditional loans is set up in a very similar way to all other types of loans. They include a term of length between 12 and 60 months. The longer the term, the higher the interest rate will be, but it will spread the payments out over a longer period of time. This should help reduce the monthly installments. Depending on the lender, the buyer will usually be able to choose the length of the loan, within certain parameters set by the financing company. For example, if the motorcycle financing terms call for borrowing $7,000 US Dollars, companies may not be willing to go 60 months.

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One of the subtle differences between motorcycle financing and a car loan is the fact that interest rates will often be higher for the motorcycle. This is due to a number of different reasons, all related in some way to risk. The risk is perceived to be higher due to the fact that a motorcycle is considered a form of recreation and often serves as a secondary vehicle. If the borrower falls on hard times, it is likely to be seen as the more expendable item and loan.

For those with bad credit, motorcycle financing may also be available. This type of financing will also involve a higher interest rate. In addition, some places offering motorcycle financing may use questionable business practices, such as tacking on a number of other fees, in order to write the loan. This can quickly add up, making the motorcycle much more expensive than it needs to be.

In nearly all cases, it is best to start seeking a loan with those whom you already have a banking relationship. Some banks or lenders may not offer motorcycle financing but many do. In some cases, if your credit is good enough, it may even be possible to get an unsecured line of credit with interest rates similar to what you may get through more traditional means.

Other sources of motorcycle financing include the manufacturer of the motorcycle, other local banks and credit unions, and the Internet. If using the Internet, it is best to find reviews online of different sites offering objective opinions of the company’s business practice to avoid unethical lenders. Financing through the manufacturer may also be a good idea, as these manufacturers often have a vested interest in making the purchase a financing a good experience. However, they can also engage in high-pressure marketing tactics as well, so use caution.

Motorcycle financing might be acquired through the manufacturer.
Motorcycle financing might be acquired through the manufacturer.

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Discussion Comments


As with any loan, understanding the terms and rates of financing a motorcycle will help you get the most out of your money. Though some of these loans can be costly, when you understand the financing rules up front, you will be able to get a good deal on the ride of your dreams.

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