A motorcycle loan is a form of financing that helps you buy a new or used motorcycle. As with other types of financing, lenders consider a variety of factors to determine whether you qualify and what rates you’ll be offered. You can get a motorcycle loan through banks, credit unions, online lenders and some dealerships. The lender will use your creditworthiness to determine your interest rate, repayment terms and other details. If you have poor credit, a lender might offer a higher interest rate to compensate for the risk.
If you want to improve your chances of getting approved for a motorcycle loan, start by reviewing your credit report and disputing any errors you find. You’ll also want to pay down debt, as this can help you reduce your debt-to-income ratio, which is a key factor in determining your creditworthiness. Some lenders may require a minimum credit score for approval, and securing your loan with collateral can lower the required score.
Before applying for a motorcycle loan, compare rates from multiple lenders to find the best one for your needs. Many online lenders allow you to check rates without a hard inquiry, which can make it easier to shop around. Once you’ve found the right lender, complete a full application and provide all necessary supporting documents.
You’ll typically have a choice between secured and unsecured motorcycle loans. Secured motorcycle loans use the bike’s title as collateral to reduce the risk to the lender, which can often result in a lower interest rate for borrowers. Unsecured motorcycle loans are typically only available through online lenders, and they tend to have a higher interest rate than secured ones.
When comparing rates, make sure to look at the total cost of the loan, including interest and other fees. You’ll also want to understand the repayment term, which is the number of months it will take to pay back the loan. A longer repayment term will mean lower monthly payments but more interest overall.
While you’re shopping for a motorcycle, crunch the numbers to make sure you can afford the purchase price and loan payments. Remember to include other costs, such as protective gear, insurance and motorcycle classes. You might be able to roll these costs into your loan, which can reduce the amount of money you’ll need to borrow and keep your payments manageable.
After you’ve secured a motorcycle loan, it’s important to make your payments on time. Missing even a single payment can damage your credit, and the lender may repossess your bike. To prevent this, set up autopay or calendar reminders to ensure you’re on track.
