Key takeaways

  • Secured motorcycle loans use the bike as collateral, so using an unsecured loan means the lender cannot take the bike if you default on the loan without a court’s permission.
  • A main benefit of an unsecured loan is that the title of the motorcycle is entirely in your name.
  • You can find motorcycle loans from auto and motorcycle dealerships, banks and credit unions, online lenders or manufacturers.

Motorcycle loans allow you to finance a new or used bike — similar to an auto loan. You can borrow from the manufacturer or dealership, and some banks offer motorcycle loans. If you aren’t going with traditional financing, you may also look into unsecured personal loans to finance your motorcycle.

Motorcycle loans differ from standard auto loans, and bike loans generally have higher rates. Compare lenders carefully to avoid excessive fees and get the best deal.

How do motorcycle loans work?

A motorcycle loan will work differently depending on whether you opt for a secured or unsecured loan. Secured motorcycle loans work similarly to auto loans. The motorcycle is the collateral; if you fail to repay, your bike could be repossessed.

Unsecured motorcycle loans are like — or often are — personal loans. They tend to have higher rates, but you won’t automatically lose your ride if you fail to repay the loan.

Secured motorcycle loan

A secured motorcycle loan differs from a loan for purchasing a car, but they work similarly. Once you find the lender you’re going to work with, the lender will transfer the money to the seller and file a lien on your collateral — typically the motorcycle itself. You’ll then pay your lender until your motorcycle is paid off.

Of course, the motorcycle doesn’t have to be collateral on a secured loan. There are other ways to secure your loan to get a low rate, but they may not be financially sound. After all, you would risk losing that collateral — like your house or savings account — if you cannot repay what you borrow.

Unsecured motorcycle loan

Unsecured motorcycle loans are based on your credit history and ability to repay. You may qualify for a low rate if you have a great credit score and a low debt-to-income ratio. Once approved, your loan is funded and deposited into your bank account. You then act as a cash buyer when negotiating with the motorcycle dealer or private party.

You’ll repay your loan just like you would a secured loan. But unlike a secured loan, the title will be entirely in your name.

Where can I get a motorcycle loan?

If you’re looking to get a motorcycle loan, you have a few options. Each of these comes with its pros and cons, so explore them all and find the one that works best for you.

Auto and motorcycle dealerships

Auto and motorcycle dealerships usually have financing options available to potential buyers, but their rates aren’t always the lowest. You may want to check out other funding sources before considering dealership financing.

Banks and credit unions

Traditional lenders like banks and credit unions are another common way to finance a motorcycle purchase. They offer a variety of flexible loan options, and you will generally have more products to choose from if you have a strong credit score.

Online lenders

Many borrowers select online financing companies because they offer competitive rates and flexible loan terms. Some online lenders will offer specific secured motorcycle loans, or you can consider an unsecured personal loan from an online lender.

Manufacturers

If you’re buying a new motorcycle, you may be able to get a loan directly from your motorcycle manufacturer. While not every manufacturer offers financing, those that do may also offer financing specials.

5 steps to get the best motorcycle loan

Here are a few things to consider to get the best motorcycle loan possible.

1. Shop around for different loan options 

Start by looking at local credit unions, banks, online lenders, dealerships and manufacturers. See who offers unsecured loan options, like personal loans that can be used towards a motorcycle. It might make sense to compare unsecured and secured options to see which have the better rates and terms.

2. Review your credit

Know your credit score and what your credit profile looks like. You can check through AnnualCreditReport.com. The higher your credit score, the more loan options you will have available and the better interest rates you will be offered.

3. Get prequalified 

Many lenders will offer a prequalification process. These often do not include a hard credit check, so they will not hurt your credit score. You often just have to provide basic details, like your name, address, income and credit history.

4. Compare

You can often find different rates through prequalification and then compare them. Check which lender has the best terms for your situation, and keep an eye out for any fees.

5. Choose your loan and apply

Once you’ve determined which loan works the best for you, apply to the loan fully. At that point, lenders may ask for bank statements, pay stubs, tax paperwork, IDs and other information to process the application if they have not already. If approved for an unsecured loan, the funds will likely go directly to you.

Frequently asked questions

  • A motorcycle loan generally works like an auto loan – a lender requires you to pledge the motorcycle as collateral, allowing them to take the bike if you can’t make payments. By comparison, most personal loans are unsecured, which means if you use one to purchase a motorcycle, a lender can’t take your bike unless it has a court’s permission.

  • You can use a personal loan to purchase nearly anything, including used motorcycles. You can also get a secured motorcycle loan for a used bike from certain manufacturers and other lenders.

  • According to J.D. Power, the average interest rate for a motorcycle loan is 3.95% for borrowers with average credit scores. But the rate you’ll receive may be higher or lower depending on several factors, such as your credit score, repayment terms, the lender you apply with and whether you choose an unsecured or secured motorcycle loan.

  • Yes, though you might have a harder time qualifying with bad credit, it’s possible since some lenders have more relaxed minimum credit score requirements. Lenders may also be more willing to approve you with bad credit if you apply for a secured motorcycle because they can take the bike if you fail to repay the loan. Keep in mind, though, that if a lender approves you for a loan with bad credit, you may have to pay a high-interest rate and fees.

The bottom line

You have many options to finance your motorcycle purchase, from dealers to banks, credit unions, online lenders and manufacturers. Each loan and lender comes with different advantages and disadvantages, so shop around to find what’s best for you.

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