If you’ve spent years dreaming of donning a leather jacket, buying a bike, and taking to the open road, you likely know that fulfilling that dream is going to be costly.
If you’re a beginner, GQ estimates that you can probably find a bike that’s perfect for a new rider without having to lay out more than $5,000 to $10,000. But if you have your heart set on a fancy bike that will make everyone turn and stare when you ride past – like the 2017 Road King from Harley-Davidson – then you’re looking at spending upwards of $20,000 or more.
And that’s just the cost of the bike. According to GQ, insurance is going to put you back several hundred dollars to over $1,000 per year depending on your driving record, and then you’ll have to budget for things like maintenance, gas, driving lessons, and protective clothing. Buying a high abrasion jacket, gloves, and boots can easily cost you around $1,000, and your helmet will cost another couple hundred dollars.
Wondering how you are going to pay for all the costs involved in buying a new bike? Many people are turning to motorcycle financing in order to help them complete their purchase. But with all the options available, you might be wondering which are the best motorcycle loans. Here’s a breakdown of the advantages and disadvantages of different types of motorcycle financing.
On this page:
- Manufacturer Financing
- Dealership Financing
- Online Financing
- Credit Union Financing
- Loans for Used Motorcycles
- Loans for Private Party Purchases
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The first type of motorcycle loans you might consider is manufacturer financing since you will likely hear about it when you go shopping for bikes if you plan on buying one new. The type of financing offered varies greatly between manufacturers.
For example, Harley-Davidson has their own financing arm via Eaglemark Savings Bank and they provide financing with term lengths of between 24 to 72 months. The interest rate they charge borrowers varies depending on their personal financial and credit history, as well as the terms of the loan, but rates start as low as 5.99%. To take out a loan, you’re required to have a 10% down payment. They also allow you to finance additional accessories and protection plans, as well as parts at the same time – which is often one of the benefits of financing your bike via a manufacturer or dealership loan.
Many manufacturers offer motorcycle financing deals at different times of the year, especially when they’re trying to sell more bikes. These deals often include discounts on interest rates or even 0% interest loans. These loans often have low minimum down payments and can be an easy and cheap way to finance your bike. They also make it easier to qualify for these loans since they are trying to use them to sell more bikes. The downside is that if you have bad credit, you might have to pay a rate much higher than the lowest rate advertised.
There are also a few downsides to these low interest loans. The first is that you are often limited in your choices when you opt for a low interest or 0% interest loan deal. Sometimes these deals are only offered on certain models of bikes because they made too many and are trying to sell out their stoc. You also often have to forego any discounts or rebates you would have otherwise gotten on the bike if you did not take the 0% or low interest financing deal.
Another downside is that these types of loans sometimes have shorter repayment terms of 12 to 24 months – which means that your monthly payments for your bike will be much higher. For some buyers, that could make these types of loans unaffordable and cause them financial hardship. The upside of the short term length loans is that you will pay less interest over the life of your loan both because they charge less and also because the loan is over a shorter period of time.
The next type of motorcycle financing that you might encounter is dealership financing. Depending on the type of dealership you go to, this can sometimes be the same as manufacturer financing. Most motorcycle dealerships won’t offer financing themselves, but will refer you to a list of approved lenders. These lenders will likely include the manufacturer’s financing arm, but they will also have a list of third party lenders that they work with.
These lenders are not always the best choice for you. Some of these lenders work with the dealership to provide motorcycle financing for people who are not approved for financing by the manufacturer because they have bad credit or they don’t make enough money. For that reason, these sub-prime or near-prime lenders often offer much higher interest rates then you would be able to qualify otherwise.
One of the ways that dealerships make money is via commissions from pushing these loans. They also use these loans as an enticement to get buyers to spend more money than they can afford. For that reason, you should know how much money you can reasonably afford to spend before walking into a dealership. The last thing you need is to buy a motorcycle you can’t afford on impulse. One way to do this is to apply for motorcycle financing before going to a dealership so that you know how much you can truly afford and what kind of interest rates you’ll qualify for. You will then know the budget you have to spend on a bike and you won’t get carried away with excitement when you see the expensive models.
Another option is to approach one of the third-party lenders that the dealership recommends and see if you can get a better deal if you deal directly with them. Some lenders charge a premium on loans where they will have to pay a commission to a dealership.
Be careful if the dealers or lenders are offering you short term loans or loans on private label credit cards. These deals sometimes offer low interest rates for a specific period of time, but after a short 12 or 24 month period the rates go up and that makes paying off your debt quite difficult. Short-term loans could also be a problem because they mean a high monthly payment.
There are a number of online lenders that offer motorcycle financing and make applying for motorcycle loans easy. Online lenders can often be a better option when financing a motorcycle than the financing options offered by manufacturers or dealers because they offer more choice around interest rates and term lengths.
The application for online lenders usually take just a few minutes to fill out online and you can often get approved within the day and get the money deposited in your bank account by as soon as the same day or the next business day. There are a number of different online lenders who offer motorcycle loans to borrowers with excellent credit and some that focus on those with poor credit.
Online lenders offer a number of different term length options, and many offer the choice between variable and fixed interest rates. Some will finance any type of motorcycle, whereas others will only finance certain models or years. Many will cover 100% of your purchase, whereas others require that you put a down payment on the vehicle. Some have pre-payment and origination fees, whereas others do not. It’s important to shop around to get a good deal and to understand the fine print of your loan.
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- Fixed rate loans from $5,000 to $100,000
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LightStream is one example of an online lender under who has an excellent track record of providing motorcycle loans. LightStream offers fixed interest rate loans that start as low as 4.69%* APR with AutoPay and they allow you to borrow between $5,000 and $100,000. The interest rate that you will pay will vary depending on your personal finances. credit history, as well as your loan amount and desired loan terms. The highest interest rate that LightStream is currently charging is 12.24%* APR with AutoPay on a loan of between $5,000 and $9999 for a term length of between 61 and 72 months*. LightStream offers term lengths that range from 24 months to 84 months*.
One of the benefits of choosing LightStream is that they don’t limit the make, model, or year of your motorcycle and the approval process is fast. You can be approved and have the money deposited directly into your account the same day that you apply*.
You can also use an online personal loan rather than a loan specifically created for motorcycles in order to buy your bike. In that case, you can get around having to use your motorcycle as security for your loan.
Credit Union Financing
Credit unions are a great place to get motorcycle loans. One of the best things about credit unions is that they are non-profit institutions that serve their members. For that reason, credit unions generally offer much lower interest rates than other options such as dealers, manufacturers, or even online loans.
Depending on your personal financial and credit history, you might be able to be approved for a motorcycle loan from a credit union at a very low interest rate and get to choose from different term length, and decide between fixed or variable interest rates. Many credit union also tend not to have a lot of fees on their financing – which might mean you can avoid prepayment fees or origination fees. Some credit unions also don’t require a down payment on a motorcycle loan.
One of the downsides of credit union loans is that they often cross-collateralized their loans. That means that if you take out a motorcycle loan, not only will the motorcycle be used as security or collateral for your loan, but your home could potentially also be used as security if you also have a mortgage with that credit union. It’s important to read the fine print in order to fully understand what you’re getting into by taking out a motorcycle loan from a credit union.
Another downside of credit unions is that you often have to meet certain qualifying criteria in order to become a member and get a loan. For example, you might need to live in a certain community or be a member of a certain profession or professional group.
Here are some examples of motorcycle loans currently available via credit unions:
Credit Union Motorcycle Loan Comparison
Altra Federal Credit Union
New or Used
Altra Federal Credit Union offers motorcycle loans for both new and used motorcycles. Their loan rates are based on your account relationships at Altra, your payment method, your personal financial and credit history, as well as the vehicle that you are buying. If you are purchasing a used motorcycle. then you might not be eligible for a longer term length because your vehicle may depreciate too much in value over the life of your loan. If you’re buying new, you’re more likely to be eligible for the longest term length that they offer of up to 84 months. Their interest rates start as low as 3.99%, but they offer discounts that could make the rate you pay as little as 2.49%.
Membership at Altra Credit Union is only open to certain communities in Minnesota, Wisconsin, Tennessee, and Texas.
Navy Federal Credit Union
New or Used
Navy Federal offers zero down payment loans which cover 100% of the financing of your motorcycle including title, tags, and taxes. They also offer refinancing on motorcycle loans from other lenders if you want a lower rate or to change your terms. They offer fixed interest rates on both new and used motorcycles which start at 5.90% and go up to as high as 7.25% on a new motorcycle and start at 7.65% and go up to 8% on a used motorcycle. Their term lengths are between 36 and 84 months.
There is an additional discount of a quarter of a percent for Navy Federal Credit Union members who are retired, on active duty, or whom have been a member of the credit union for 25 years.
Membership in Navy Federal Credit Union is open to those in the military, civilians who work closely with the military or Department of Defense, and the family members of members.
Unify Credit Union
New or Used
Unify Credit Union offers motorcycle loans without a down payment for up to 6 years or 72 months. They provide fixed rate financing for both new and used motorcycles. Their loans for new motorcycles start as low as 4.49% for a three-year loan. Their rates for used motorcycles start as low as 4.99% for a 3 year loan. With both new and used motorcycles, your interest rate goes up if you choose a longer term. Unify charges no annual or prepayment fees and gives you up to a 0.25% discount on interest if you have certain types of accounts or pay via auto-payment.
Unify Credit Union doesn’t have restrictive membership rules and is open for membership to residents or citizens of the U.S.
Teachers Federal Credit Union
New or Used
Teachers Federal Credit Union has online applications that make getting a motorcycle loan easy with a quick online application. They offer up to 90% financing of your purchase over 60 months with a maximum loan amount of $30,000. They finance both new and used motorcycles, but used motorcycles can’t be more than three years old in order to qualify. Their new motorcycle loans start as low as 2.45% and their used motorcycle loans start at 4.34%.
TFCU offers membership to all people and businesses located in Nassau and Suffolk counties in New York. If an immediate family member is a member, you can also join no matter where you live.
Loans for Used Motorcycles
There are a number of ways you can get loans for used motorcycles. Dealerships and manufacturers often have a list of approved lenders who provide financing on resold bikes. Also, online and credit union lenders will often offer financing on used motorcycles.
There are a few downsides to motorcycle financing, however. First, you’ll often pay a premium on your interest rate since your bike will depreciate faster and so the lender is having to charge more to balance out the additional risk. Another downside is that the term lengths for used motorcycle loans might be shorter. A lender might not want to extend your loan past 36 or 48 months which would make your monthly payments higher. Some lenders also won’t finance used bikes at all or will only finance certain makes, models, or years. Some have cutoffs where bikes that are over a certain number of years old aren’t eligible for financing.
Since it is more difficult to find a loan for a used motorcycle and since the costs can be higher, it’s important that you shop around for the best deal.
Loans for Private Party Purchases
If you decide to buy your motorcycle off a guy on Craigslist who is offering a much better deal than the dealership is on the same bike, you might be wondering if you’ll still be able to get financing for your bike. The good news is that you can. Many online, traditional lenders, and credit union lenders offer financing on private party bike purchases.
In the case of a private party purchase, you would apply for financing in the normal way with all the details about the bike you want to purchase and the money would be deposited in your bank account to pay for your purchase. You would then pay for the bike in cash.
* Your loan terms, including APR, may differ based on loan purpose, amount, term length, and your credit profile. Rate is quoted with AutoPay discount. AutoPay discount is only available prior to loan funding. Rates without AutoPay are 0.50% higher. If your application is approved, your credit profile will determine whether your loan will be unsecured or secured. Subject to credit approval. Conditions and limitations apply. Advertised rates and terms are subject to change without notice.Payment example: Monthly payments for a $10,000 loan at 7.24% APR with a term of 3 years would result in 36 monthly payments of $309.87. LightStream disclosures here.
** After receiving your loan from us, if you are not completely satisfied with your experience, please contact us. We will email you a questionnaire so we can improve our services. When we receive your completed questionnaire, we will send you $100. Our guarantee expires 30 days after you receive your loan. We reserve the right to change or discontinue our guarantee at any time. Limited to one $100 payment per funded loan. LightStream and SunTrust teammates do not qualify for the Loan Experience Guarantee.