If you have your sights set on a new or used motorcycle, weighing up your financing options is an important step. Although motorcycles are considerably cheaper than cars, they can be a sizable investment. Riders must ensure their bike is roadworthy and fully kitted with performance parts to remain safe on the road. Securing motorcycle financing helps ease the burden of affording your dream bike, ensuring your safety isn’t compromised when you get on the open road.
Several viable sources for motorcycle loans include credit unions, banks, and online lenders. While motorcycle lenders typically use similar criteria to determine auto loan rates, there are pros and cons to choosing a financial institution. To secure the lowest rates and the most flexible terms, motorcyclists must understand the loan process and what a loan application involves.
Dealership Financing
Many gearheads are reluctant to buy directly from dealerships if their dream bike is available elsewhere. Certain establishments have reputations for hard selling. Salespeople are known to push upgrades, accessories, and add-ons to increase the sales price and, subsequently, their commission. While this isn’t always the case, dealership prices tend to be significantly higher than those from private sellers.
However, there are some upsides to buying from a reputable dealership. Their showrooms carry a variety of makes and models, available in a range of colors and with optional modifications. If you don’t have a specific bike in mind, dealerships tend to offer excellent variety.
Most facilities allow you to schedule test drives ahead of your visit. They also offer binding warranties in case anything goes wrong following your purchase. Going the dealership route might cost a little more, but it can provide added security and peace of mind that you may not get from a private party seller.
One of the key advantages of buying from a dealership is the financing options. A dealership is one of the only places you may get a zero-interest deal. If you meet their financial requirements, you can pick up your dream bike with little to no interest on monthly payments.
Depending on the dealer, you may be able to start the loan application process online. Prequalification can save you a lot of time in-store or negotiating with a salesperson.
Bank Auto Loans
A bank loan is one of the most popular ways to finance a motorcycle. Banks are established lenders that offer reliable financial services to their customers. Loan seekers may feel more comfortable borrowing from a bank than private personal loan lenders due to their reputation and significant cash flow.
Banks also offer additional services that make them more attractive lenders, including online banking, 24-hour telephone banking, and mobile banking. These services make it easier to track payments and monitor your balances. Some banks may even allow you to apply for a home equity line of credit to acquire loan funding for your vehicle.
Modern banks typically offer preapproval directly from bank tellers or through an online loan prequalification tool. This service allows you to budget accurately, speeding up the purchasing process.
The biggest downside of getting a bank motorcycle loan is the high-interest repayment rates. Banks typically offer significantly higher motorcycle loan rates than credit unions or dealerships. They often charge a range of additional fees, like application fees or an origination fee. If you have poor credit, a bank may even reject your application.
Credit Unions
Like banks, credit unions are established and reliable lenders. They offer secured loans at competitive rates. Credit unions are member-owned, not-for-profit financial institutions. This allows them to offer lower interest rates for traditional motorcycle loans than most other lenders.
Some credit unions may even offer unsecured loans for motorcycles. However, unsecured loan applications depend significantly on your credit history and FICO score. Since this is a “no-collateral” loan, it is also likely to involve higher interest payments.
Credit union loans are only available to members, so you must sign up at your local branch to meet eligibility requirements. However, credit union memberships are usually free, and you can complete the entire process in a single appointment.
Credit unions are trustworthy lenders that provide affordable financial services to their customers. They are usually willing to work with all members, regardless of their personal credit history or current financial situation. The chance of approval for a loan is typically much higher than with banks.
Motorcycle Manufacturer Financing
Many major motorcycle manufacturers, like Harley-Davidson, offer financing on their road motorcycles. Rather than using a bank, credit union, online lenders, or private-party financing companies, you can get low-interest financing directly from the best-known motorcycle manufacturers.
Loan features can vary depending on the manufacturer. Harley-Davidson motorcycles have developed an excellent reputation for providing affordable secured motorcycle loans on new and used bikes.
Harley-Davidson motorcycles are typically quite expensive compared to other popular brands. If you can’t purchase your new motorcycle with cash, Harley-Davidson financial services ensure you don’t miss out on your dream bike. Harley offers a wide range of options, including zero downpayment and low-interest loans.
Harley-Davidson financing is available to customers with fair credit but reserves the lowest rates for those with better credit profiles. A key advantage of sourcing credit from Harley-Davidson is that they allow you to cover gear and services in your loan agreement. They even offer financing if you purchase from a private seller.
With this type of financing, loans are only available on models produced by each specific manufacturer. So, if you’re in the market for a KTM dirt bike, Harley-Davidson financial services won’t approve a loan.
How to Secure a Suitable Motorcycle Loan
The three most important factors in securing a motorcycle loan are the loan amount, interest rate, and term. Finding the right balance depends on your creditworthiness, financial situation, and repayment ability.
Negotiating a reasonable purchase price is a great starting point. However, since rate ranges vary significantly between different lenders, it’s important to do comparison shopping before choosing a lender. Shopping around helps you determine different minimum loan amounts, rate discounts, and vehicle-related paperwork needed to complete the process.
Remember that low monthly payments shouldn’t be the priority. This type of installment loan is usually more expensive in the long run. An affordable, low-interest loan that you can pay off over a shorter period is usually the cheapest.
It’s also important not to overextend on bike loans. Taking on an overly ambitious payment plan can cause significant issues down the line, resulting in loan default. Unforeseen financial problems can occur, so base your loan decision on what you can afford.
Improve Your Credit Score
Your credit score is one of the most influential factors in getting a low-interest loan. You can check your credit score by requesting credit reports from the major credit bureaus: Experian, Equifax, and TransUnion. Depending on your chosen lender, the minimum credit score requirements vary.
Most financial institutions recognize an excellent credit score as 700 and above. This score indicates creditworthiness to the lender, helping ensure they recognize you as a low-risk borrower. If you want to improve your credit score before applying for a loan, here are some tips:
- Dispute errors on your credit report
- Pay bills on time
- Pay off overdue debts
- Use a secured credit card for payments where possible
- Maintain a low credit utilization ratio (around 30%)
- Avoid regular hard checks on your credit report
T&I Credit Union Motorcycle Loans
T&I Credit Union is a reputable lender in Michigan. We offer affordable financing on motorcycles, cars, and other auto vehicles. Our experienced team is dedicated to providing lending services that improve the lives of our members. We pride ourselves on excellent customer service and high-quality financial solutions.
Currently, we offer 60-month motorcycle loans at 3.99% APR, with a 10% down payment for new bikes (2019 to 2022). Our used or refinance loan option for older bikes (2013 to 2018) is available for up to 60 months at 4.99% APR.
If you require a different loan term, contact us directly for more information. All rates are subject to a credit check. However, we are willing to work with members with bad credit, so don’t hesitate to contact your local branch for assistance.
Online Solutions
T&I Credit Union is a comprehensive financial institution, offering members a host of helpful online solutions.
Join us today and get:
- Online banking
- Online bill-paying services
- eStatements
- Mobile app
- Online loan applications
Member Services
We also provide a range of member services, including financial counseling. Members are invited to free credit score analysis seminars to learn how to analyze and raise their credit scores, reduce debt, and manage their finances more effectively. We also allow borrowers to skip a payment once per year if they need to save for a vacation, wedding, or important event.
Other member services include:
- Debit and ATM cards
- Auto loan calculators
- Wire transfers
- Money manager dashboard
- Document notarization
- Safety deposit box
Secure Affordable Financing for Your Dream Motorcycle Today
Only motorcyclists understand the thrilling sensation of hitting the road on two wheels. If buying a bike is your dream, make it a reality with a motorcycle loan from T&I Credit Union. We can provide the financial assistance you need to buy the bike you’ve always wanted.
Begin the loan process today through our online application form. Visit your local branch if you’d prefer to get started with a loan officer. For any more information on our rates or ancillary services, feel free to contact us online or give us a call at (248) 588-6688.
