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While motorcycles are generally cheaper than cars, you may still need a loan to buy one if you don’t have enough cash. You can apply for a loan if you want to upgrade your bike. Or, you can pay for a motorcycle with cash but opt ââfor a loan to build your credit, especially when interest rates are low.
If you are thinking of using a personal loan to finance your motorcycle purchase, see Credible to Compare personal loan rates in minutes.
What is a motorcycle loan?
Motorcycle loans are either personal loans or specialty loans that are used to buy a motorcycle or ATV. A motorcycle loan is like a car loan – the lender extends the financing and you pay back the loan in monthly installments with interest. The loan amounts for motorcycle loans are typically lower than for cars, trucks, or other vehicles.
You have several motorcycle loan options to buy your dream bike.
- Online Lender – These lenders don’t have the usual overheads to deal with, so you may find more competitive rates and a streamlined application and funding process.
- Banks – You may prefer to work with a trusted banking institution, especially if you already have an account.
- Credit Unions – The interest rates of the credit unions are usually lower than those of the traditional stationary banks. Credit unions usually require membership in order to offer you credit, but these requirements are often minimal.
- Dealer – When buying a motorcycle from a dealer, you may be able to apply for dealer financing. While this is convenient, the dealer can ask for a down payment and increase your APR. Be sure to compare multiple loan offers before signing on the dashed line.
When you buy a motorcycle loan, compare key factors for each lender, The following is included:
- Loan Amounts – Comparing pre-qualified offers can remove lenders from your list who cannot offer you the amount you want. You also need to make sure that the monthly payment is within your budget. You can a. use Personal loan calculator to get an idea of ââhow much you can afford to borrow.
- Annual interest rate – The annual percentage rate of charge (APR) takes into account the total cost of the loan, including your interest rate and fees, if any. A lower interest rate usually means your loan will cost less overall. The interest rate offered depends on your creditworthiness, repayment term, and other factors.
- Terms of repayment – The repayment period is the amount of time you have to repay the loan. Conditions for personal loans are usually between 12 and 60 months or longer. Longer loan terms mean lower monthly payments, but you end up paying more interest over the life of the loan.
- Fees – When comparing different loan offers, be aware of fees. Read the loan agreement and look for fees such as placement fees and closing costs. Your lender may even impose a prepayment penalty if you repay your loan early.
You can start comparison shopping by checking Credible’s list of items Affiliate lenders who offer motorcycle loans.
Secured vs. Unsecured Motorcycle Loans
Many motorcycle loans – like those from dealerships – are collateralized, which means you will need to use the motorcycle or other asset as collateral. Remember, with a secured loan, the lender can repossess your collateral if you fail to make your payments.
If you don’t want to risk losing collateral with your credit, you can opt for an unsecured personal loan. Unsecured personal loans pose a higher risk for the lender because they cannot cover costs if you fail to repay your loan. To mitigate the lender’s risk, unsecured loans can have higher interest rates and require a higher credit rating for approval.
How do I get a motorcycle loan?
Even if your motorcycle loan is not as large as a car loan, you still want to make sure that you are getting the best deal possible. The good news is that you can usually apply for a motorcycle loan online. Here is a simple four step process to get motorcycle loan:
- Check your credit history. Lenders will check your creditworthiness and income to determine if you are eligible for a loan. This is especially true for unsecured loans. Preferably First, check your credit report, look for harmful bugs and deny any bugs you find.
- Think how much you can afford. Motorcycle loan approval won’t do much if you can’t afford it. Follow the numbers with a. out Wage calculator and make sure that there is enough headroom in your monthly budget to be able to afford a motorcycle loan payment.
- Compare Lenders. When you compare the rates of several lenders, you will quickly see how different the offers can be. It is a good idea to choose the lender that offers the lowest APR and the fewest fees while making sure the monthly payments fit your budget.
- Apply for your loan. Once you have chosen a lender, all you have to do is submit your application. In general, you’ll need to provide your contact information, social security number, and some basic financial records. The lender can ask you for supporting documents such as: B. a driver’s license and a W-2. You will likely be able to get a decision on your loan quickly, especially if you are applying to an online lender.
What credit do I need for a motorcycle loan?
It is possible to get a motorcycle loan with a lower credit score. Many personal lenders approve borrowers too bad to fair credit. Note, however, that you must have good to excellent credit ratings to qualify for the best rates and terms. That means your credit score must be at least 700 to qualify for the best deals.
What are typical motorcycle loan repayment terms?
When you get a motorcycle loan through a dealer, your repayment period is typically one to seven years. Personal loans usually have shorter terms of one to five years. If your loan is stretched over a longer term, your payments will be lower. However, more payments also mean higher interest charges, so the total amount you have to pay may be much higher than what you would pay with a shorter loan term.
On the other hand, if your repayment term is shorter, your monthly payment will be higher in order to repay the loan faster. However, you pay less interest, which means that your loan is usually cheaper with a shorter repayment period than a longer one.
Visit Credible to Compare personal loan rates for your motorcycle purchase.