Buying a motorcycle is exciting – the thrill of the open road, the wind in your hair, and the freedom of two wheels. But before you can hit the highway, you might need some financial assistance. That’s where motorcycle loans come in, providing the means to turn your dream bike into reality.
Navigating the world of motorcycle loans can be confusing. That’s why our experts have analyzed the top lenders to help you find the best fit for your needs. Here’s a quick look at four outstanding options:
- SoFi: Best for quick motorcycle loans with good to excellent credit.
- Upstart: Best for borrowers with less-than-perfect credit.
- Upgrade: Ideal if you need the flexibility of a co-applicant.
- Universal Credit: A good choice for small motorcycle loans with fair credit.
SoFi
Best For: Quick motorcycle loans
Loan Amount: $5,000 to $100,000
Est. APR: 8.99% to 25.81%
Loan Term: Varies based on the loan agreement
What to Know:
- SoFi offers an easy online application process, quick loan approvals, and fast funding times.
- They provide loans for both new and used motorcycles.
- Applicants benefit from SoFi’s exceptional customer service and support.
- SoFi considers alternative credit data beyond just credit scores.
- They offer unemployment protection on loans.
- However, they require good to excellent credit and do not offer flexibility in payment due dates.
| Pros | Cons |
|---|---|
| ✅ Easy online application | ⛔ Requires good to excellent credit |
| ✅ Quick approval and funding | ⛔ No choice of payment due date |
| ✅ Loans for new and used motorcycles | |
| ✅ Excellent customer support | |
| ✅ Considers alternative credit data | |
| ✅ Unemployment protection |
How to Qualify:
- Must be at least 18 years old and a U.S. resident.
- A healthy credit score and financial stability are important.
- Required documentation includes proof of identification, income, and other financial details.
- The application involves creating an account, filling out the form, submitting necessary documents, and awaiting approval.
Upstart
Best For: Bad credit motorcycle loans
Loan Amount: $1,000 to $50,000
Est. APR: 6.40% to 35.99%
Loan Term: 36 months or 60 months
What to Know:
- Upstart is an online platform that utilizes artificial intelligence for loan approvals, considering factors beyond just the credit score.
- The platform looks at aspects like employment history, income, and education level.
- While it caters to borrowers with low credit scores, loans for such profiles might have higher APRs.
- Upstart charges origination fees and has high maximum APRs.
- The platform offers quick funding, usually within one business day after approval.
| Pros | Cons |
|---|---|
| ✅ Considers more than credit score | ⛔ High maximum APR |
| ✅ Loans up to $50,000 | ⛔ Origination fees |
| ✅ Fast funding | ⛔ No physical locations |
| ✅ Rate check without affecting credit | ⛔ Limited availability (not in Iowa or West Virginia) |
| ✅ Low minimum credit score requirement | ⛔ Limited repayment terms |
How to Qualify:
- Minimum annual income of $12,000
- College degree or actively attending if you have no credit history
- Provide necessary documentation like proof of income, employment history, bank statements, and identification documents.
Upgrade
Best For: Motorcycle loans with co-signers
Loan Amount: $1,000 to $35,000.
Est. APR: Higher rates due to greater assumed risk by the lender.
Loan Term: Flexible, with options up to seven years.
What to Know:
- Upgrade is well-suited for motorcycle buyers, especially those with fair credit scores.
- They offer personal loans that can be used for major purchases, including motorcycles.
- The application process with Upgrade is straightforward, allowing you to understand the types of loans and rates you qualify for without impacting your credit score.
- Credit scores starting from approximately 580 are accepted, making it a good option for a broader range of borrowers.
- Upgrade stands out by allowing co-applicants and joint applications, while not permitting co-signers.
- However, the company charges origination fees and generally has higher APR rates, reflecting the higher risk associated with lending to borrowers with lower credit scores.
- It’s important to check if Upgrade’s services are available in your state, as they are not offered nationwide.
| Pros | Cons |
|---|---|
| ✅ Accessible to borrowers with credit scores starting around 580 | ⛔ Origination fees apply |
| ✅ User-friendly process for loan rate inquiries | ⛔ Higher APR rates due to increased lender risk |
| ✅ Co-applicants and joint applications allowed | ⛔ Loans not available in all states |
| ✅ Suitable for financing motorcycle purchases | ⛔ Minimum loan amount might be high for some borrowers |
| ✅ Quick insights into eligible loans and rates without impacting credit score |
How to Qualify:
- Ideal for those with fair credit scores (around 580 or higher).
- The application process involves a few questions to identify suitable loan options.
- Being aware of the financial commitment is crucial due to the higher APRs.
- Applicants should verify the availability of Upgrade’s loans in their respective states.
Universal Credit
Best For: Small motorcycle loans with fair credit
Loan Amount: $1,000 to $50,000.
Est. APR: 11.69% to 35.99%.
Loan Term: 3 or 5 years.
What to Know:
- Universal Credit is operated by the online lender Upgrade, and it caters specifically to borrowers with lower credit scores (629 or below).
- The loans include features like credit building tools and a mobile app.
- They offer discounts for autopay setup and for directly paying off creditors on debt consolidation loans.
- The loans are fast to fund, usually within a day or two after approval.
- They do charge origination fees ranging from 5.25% to 9.99%, and late fees also apply.
| Pros | Cons |
|---|---|
| ✅ Tailored to borrowers with low credit scores | ⛔ High APR rates |
| ✅ Offers credit-building tools | ⛔ Charges origination and late fees |
| ✅ Fast funding after approval | ⛔ No options for joint, co-signed, or secured loans |
| ✅ Discounts for autopay and debt consolidation |
How to Qualify:
- A minimum credit score of 560 is required.
- Applicants must be U.S. citizens or permanent residents, or living in the U.S. on a valid visa, and at least 18 years old in most states.
- A verifiable bank account and a valid email address are necessary.
- There’s no specified minimum income requirement, but a debt-to-income ratio up to 75% is acceptable.
Types of Motorcycle Loans
When you’re in the market for a motorcycle, understanding the various loan options can help you make an informed decision. Here are the main types of motorcycle loans available:
Secured Motorcycle Loans
This is the most common type of motorcycle loan. In a secured loan, the motorcycle itself acts as collateral. This means if you fail to make payments, the lender can seize the motorcycle to recover the loan amount. The interest rates for secured loans are generally lower because the lender has less risk.
Unsecured Motorcycle Loans
Unlike secured loans, unsecured loans do not require any collateral. This means the lender cannot automatically seize your motorcycle if you default on the loan. However, because these loans are riskier for lenders, they often come with higher interest rates and may require a higher credit score for approval.
Personal Loans for Motorcycle Purchase
Some buyers opt for personal loans to finance their motorcycle purchase. Personal loans are typically unsecured and can be used for a variety of purposes, including buying a motorcycle. The terms and interest rates for personal loans can vary widely based on your credit history and the lender’s policies.
Manufacturer Financing
Many motorcycle manufacturers like Honda, and Harley-Davidson offer financing options for their models. These loans can be either secured or unsecured and sometimes come with promotional offers like lower interest rates for a specific period.
Manufacturer financing can be a convenient option, but it’s important to compare these offers with other loan types to ensure you’re getting the best deal.
Credit Union Motorcycle Loans
Credit unions often offer motorcycle loans with competitive interest rates and terms. These institutions are member-owned and may offer more personalized service. To access these loans, you typically need to be a member of the credit union.
Online Lenders
The rise of online lending platforms has made it easier to obtain motorcycle loans. These lenders often provide quick application processes and competitive rates. However, it’s crucial to research and ensure the lender is reputable and offers terms that align with your financial situation.
Comparing Motorcycle Loans
When choosing a motorcycle loan, consider these key factors for a smart decision:
- Interest Rates: Essential for cost-saving. Compare rates from various lenders to find the most favorable one.
- Loan Term: Balance between term length and monthly payments. Shorter terms mean higher payments but less interest overall, and vice versa.
- Fees and Penalties: Check for any extra costs like origination or prepayment fees.
- Down Payment: A higher down payment can reduce your loan amount and interest rate, but requires more upfront cash.
- Credit Score: A higher credit score often leads to better loan terms. Check and improve your score if needed.
- Loan Restrictions: Be aware of any limitations on motorcycle types or purchase locations.
- Insurance Requirements: Secured loans might need full insurance coverage, adding to overall costs.
- Pre-Approval: Consider getting pre-approved for a clearer budget and stronger negotiation position.
Choose a loan that aligns with your financial situation and motorcycle preferences. Click the button below to use our motorcycle loan calculator and estimate your monthly payment.
Steps to Apply for a Motorcycle Loan
Getting ready to apply for a motorcycle loan involves several steps to ensure you are well-prepared and can secure the best possible terms. This section offers guidance on how to prepare for your loan application:
Review Your Credit Report
Your credit score significantly impacts your loan terms. Obtain a copy of your credit report from the major credit bureaus and review it for accuracy. Rectify any errors and understand your credit score to gauge your chances of approval and the terms you might receive.
Calculate Your Budget
Determine how much you can afford to spend on a motorcycle, including the down payment, monthly loan payments, insurance, maintenance, and other associated costs. This budgeting will help you decide the loan amount you should apply for.
Use our Motorcycle Loan Calculator to help!
Gather Necessary Documentation
Lenders will typically require proof of income, employment, residence, and identity. Prepare documents like pay stubs, tax returns, utility bills, and a government-issued ID to streamline the application process.
Decide on the Type of Motorcycle
Your choice of motorcycle can affect your loan options. For instance, some lenders have restrictions on financing used motorcycles or certain makes and models. Decide on the type of motorcycle you want and ensure it aligns with your loan options.
Shop for Lenders
Explore different lenders to find the best rates and terms. Consider banks, credit unions, online lenders, and financing options through motorcycle dealerships. Don’t hesitate to negotiate terms and ask for better rates or more favorable conditions.
Consider a Co-signer (if Necessary)
If you have a lower credit score or limited credit history, a co-signer can improve your chances of approval and potentially secure better loan terms. Ensure your co-signer understands their responsibilities and the impact on their credit.
Understand the Approval Process
Familiarize yourself with the lender’s approval process, including the time frame for approval and funding. Knowing these details can help you plan your purchase timeline more effectively.
Read the Fine Print
Before finalizing any loan, read all the terms and conditions carefully. Pay attention to the interest rate, APR, total cost of the loan, prepayment penalties, and any other fees.
Plan for Loan Repayment
Develop a plan for how you will repay the loan. Consider setting up automatic payments and whether you can make extra payments to pay off the loan faster.
Frequently Asked Questions
Can I get a motorcycle loan with a bad credit score?
Yes, it’s possible to get a motorcycle loan with a bad credit score, but it may come with higher interest rates. Some lenders specialize in bad credit loans. It’s advisable to improve your credit score before applying to get better terms.
What is the average interest rate for motorcycle loans?
The average interest rate varies widely based on factors like your credit score, the loan amount, and the lender. Rates can range from as low as 3% to over 10%. It’s important to shop around to find the best rate.
Is a down payment necessary for a motorcycle loan?
While not always required, a down payment can lower your monthly payments and the total interest paid over the loan’s life. The size of the down payment varies depending on the lender and your credit profile.
Can I finance a used motorcycle?
Yes, many lenders offer loans for used motorcycles. However, the terms and conditions might differ from new motorcycle loans, including higher interest rates or shorter repayment periods.
What kind of documentation do I need to apply for a motorcycle loan?
Typically, you’ll need proof of income, identification, proof of residence, and credit information. Some lenders might also require additional documentation.
Can I include the cost of motorcycle accessories in my loan?
Some lenders allow you to finance the motorcycle along with accessories and related costs. However, this varies by lender, so it’s important to ask about their specific policies.
