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Are you looking to finance the purchase of a motorcycle? You may be unsure about your available options, and it can seem like a balancing act to find the right solution. This is especially true if selling your last motorcycle didn’t yield much cash. Luckily there are many motorcycle loan options available these days including traditional bank loans, manufacturer special offers, online personal loans, and many others. The hard part is picking the option that best fits your needs, but we’ll walk through several options. You’ll still ultimately need to decide for yourself, but at least you’ll have some information to make an informed decision.
If you’re buying a new motorcycle and see a crazy low interest offer, the manufacturer of the motorcycle is likely subsidizing that loan offered at the dealership for buyers. If you have great credit, you’ll often run into brands offering very low, or even 0%, financing offers on new motorcycle purchases. In these scenarios the manufacturer is in effect paying the interest on the loan as a marketing campaign to encourage buyers to purchase their brand of motorcycles. They sell more motorcycles, and the buyer saves of interest for purchasing their brand.
Some brands also offer special deals for used motorcycles, but this is more rare than new bikes. There is less incentive for the manufacturer to help here, because they’ve already sold that motorcycle. Many manufacturers may even see it working against their interests, because they’d prefer that you buy a new motorcycle instead of a used motorcycle. That being said some do have programs to help used sales like Harley-Davidson who offers a rider to rider financing program. This program allows private sellers of Harley motorcycles to offer financing, which is otherwise relatively rare in the pre-owned market.
Bank Personal Loans
Many banks offer personal loans where you can use the money they lend you for any purpose. This means the loan is unsecured and they cannot repossess the motorcycle. You’ll usually need excellent credit for a loan like this, because their is no collateral and they are loaning you money just based on your credit history. The interest rate on a personal loan for a motorcycle will fluctuate wildly depending on the bank, your credit history, and the size of the loan. If you go this route, make sure to look around at a few banks and see what sort of rates are being offered. Keep in mind this rate is not guaranteed, and you will need to provide your personal information to get an exact interest rate quote.
Some banks will also offer third-party motorcycle or specialty vehicle loans where the motorcycle is used as collateral on the loan. These are actually rather rare in practice from traditional lenders. Most loans that are listed as motorcycle loans by the bank are actually personal loans being marketed as motorcycle loans, but they are unsecured and have rates similar to a normal personal loan. The majority of collateral-backed motorcycle loan offers are not for purchasing motorcycles. Instead they are usually refinance offers or a motorcycle title loan similar to a home equity loan. Basically these loans help you get equity or cash out of a motorcycle that is already paid off.
Peer to Peer Lending
There are several online platforms that offer personal loans for any reason, and they are funded by other people instead of a bank. Your interest rate will depend on your credit history, but you don’t need to have excellent or even great credit to apply. If you have a lower credit score, you will likely just need to pay a higher rate. Two of the largest websites that offer this service are Prosper and Lending Club.
Making Your Decision
These options are just a few of the more common methods that people use to fund their motorcycle purchase. The folks at ChopperExchange also have a motorcycle financing center that can help you find a loan that fits your need.