How to Get a Motorcycle Loan in the U.S.

According to the Motorcycle Industry Council, the number of motorcycles in households has boosted to 8.02% in 2018, compared to 6.94% in 2014. But not all of these people might have gotten their motorcycles with their own money, as not everyone has enough cash to afford one. Many have succeeded thanks to a motorcycle loan. What exactly are motorcycle loans, and how to get one, though?

What Is a Motorcycle Loan?

A motorcycle loan is a type of loan used to purchase a new motorcycle. These loans can be both unsecured and secured. In case of a secured loan, you need to use something as collateral in order to back up the loan. More often than not, it is the motorcycle itself that is used as collateral. If you don’t make payments on time, then your collateral will be taken away.

On the other hand, unsecured loans don’t require collateral, so if you don’t want your motorcycle potentially repossessed by the lender, you can seek these. But since these come with greater risk for the lender, they tend to be harder to obtain. Lenders will require you to have a higher credit score, and the loan will usually have a higher interest rate compared to a secured one.

Before You Apply

Some things have to be done before you apply for a motorcycle loan. More specifically, you need to get both a motorcycle license and motorcycle insurance. Whereas the former will let you ride a motorcycle legally and safely, the latter will be beneficial in case you suffer from loss, injuries or theft while riding your motorcycle. Better said, it will cover some of the costs that you would otherwise have to deal with yourself. As both of these are of great importance, here is how to get them:

Motorcycle Licenses

With 33% of the deaths in motorcycle crashes happening due to improperly licensed riders, you need to make sure that you get your license before applying for a loan. Basically, you aren’t allowed to ride a motorcycle without having a license. It’s illegal, and you don’t only put yourself at risk, but you’ll put others at risk too. Getting a license means you are good enough at riding it to be let to wander the roads on your motorcycle.

Not to mention that having a license will help you avoid fines and jail time as well. In order to get a license, you have to:

• Take a motorcycle safety course to familiarize yourself with the dangers and know what to do.
• Learn the state-specific motorcycle requirements.
• Pass an eye exam and written test at the local motor vehicle office.
• Take the road skills test
• Pay a fee to get the endorsement or license

Motorcycle Insurance

You never know when you’re going to get injured while you’re on your motorcycle. According to statistics from the National Highway Traffic Safety Administration (NHTSA), “In 2016, there were 5,286 motorcyclists killed – a 5.1-percent increase from the 5,029 motorcyclists killed in 2015.” So, as motorcycle accidents are very possible, you need to cover the costs of injuries, loss or damages.

You can apply for insurance if you need one, and some of the most popular options are Allstate, Safeco, Nationwide, and Markel.

Where to Get a Motorcycle Loan

Since you want to get a motorcycle loan, you also need to know where to get it from. There are multiple options, but which one is the most suitable? Here is what’s in store for you:

Dealerships – Unless you want to go to your local bank, you can try getting a loan from a dealership. There are a few dealers willing to submit your loan application in order to increase your chances of obtaining the loan, which may be amazing if you’re a non-US resident.

But although it is a convenient method from this point of view, it is also a little disadvantageous when you think that the dealer adds fees to the quote. It’s not always the case, but it’s a frequent occurrence.

There are dealerships that may offer you in-house financing too, which may seem tempting if you have a low credit score. This will have greater interest rates, though.

Manufacturers – It seems unlikely when you first think of it, but there are actually manufacturers who offer loans online. One of the manufacturers is BMW, but Harley Davidson is also known to do this.

Credit Unions

Credit unions are convenient because they allow you to apply for a preapproval, which will include a quote on loan terms. While the preapproval doesn’t guarantee that you will get the loan, it’s a great way to see the loan terms and decide if you should try this lender or look for another one.

Private Lenders – If you want to settle for private lenders, you can. They offer unsecured personal loans in case you don’t want your motorcycle to be secured to the loan. You can shop around and potentially find the best private lender with the best interest rates and loan terms, so your monthly payments will be easier to deal with.

Personal Loans for Motorcycles

Personal loans can also be a great way for you to afford a motorcycle, and many people seem to love these loans, as shown by the 19.2% growth in Q1 2019. The cool thing with personal loans is that they have a lower interest rate. This is possible because the lender usually doesn’t care what you do with the money. You can buy whatever you want. What the lender is interested in is whether you’re able to repay the loan or not.

Therefore, if you want a loan like this, make sure to shop around for the best deal.

Tips for Getting the Best Motorcycle Loan

Do you want to get the best motorcycle loan? Then you need to know what steps to take to make that possible. Here are the necessary steps:

Review Your Credit Score – Is your credit score good, or is it below the required level? Creditworthiness is one of the things relevant to your qualification, so you can’t overlook it. If you want to apply for a loan, check out if you have a good score and if you don’t, try your best to improve it.

Know Your Budget – Don’t rush to buy the most powerful and expensive motorcycle on the market. First, look at what you’re able to afford with your cash. Make sure that your auto payments don’t go above 15% of your monthly net income.

Shop Around – You need to take a good look at all lenders you encounter to figure out if they are convenient or not. The shopping process will slow down your motorcycle buying process, but at least you’ll have peace of mind that you will not have to suffer in the long term. Shop around for lenders and find one with the lowest interest rate and best loan terms.

Conclusion

If you want to be one of the over 1.5 million households in the U.S. to own a motorcycle, then you should consider a motorcycle loan. Obtaining one is not that hard – you just need to shop around properly and have a good credit score. To find out more details, check our website.

Frank Gogol

I’m a firm believer that information is the key to financial freedom. On the Stilt Blog, I write about the complex topics — like finance, immigration, and technology — to help immigrants make the most of their lives in the U.S. Our content and brand have been featured in Forbes, TechCrunch, VentureBeat, and more.

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