There’s nothing quite like going for a long motorcycle ride on a warm, sunny day—just you, the open air, and the road ahead. It’s an experience that only motorcycle riders can truly understand and appreciate.
So if you’re thinking about buying a motorcycle, you may be wondering how long of a loan term you can get. It will depend on several factors including the lender, the loan amount, and your monthly income. Let’s take a look at motorcycle loans and how they are similar and different from other vehicle loans.
How Do Motorcycle Loans Work?
Motorcycle loans are very similar to car and boat loans. If you’re approved, you’ll receive the full amount of the loan upfront to purchase your motorcycle. You will then repay it with fixed monthly payments.
Like car and boat loans, motorcycle loans also have fixed interest rates. The rate you pay is locked in when the loan is created and won’t change over the life of the loan. The interest rate you’ll pay is based on several factors including the current market rate and your credit score, among other things.
If you get a secured loan, the motorcycle will serve as collateral. This means that if you don’t make your payments, the lender can seize the motorcycle as a way of getting their money back. With an unsecured loan, on the other hand, collateral isn’t part of the deal because your credit history is so good that the lender trusts that you’ll make all of your payments on time.
How Long Are Motorcycle Loans?
The length of time you can finance a motorcycle will vary depending on the lender, but most will issue motorcycle loans with terms of 3-5 years.
The size of your loan and your monthly income are two important factors to consider for your loan term. A longer term will allow you to have lower monthly payments because loan payments will spread out over more years. However, this also means you’ll end up paying more in interest over time. A longer term may also allow you to buy a more expensive motorcycle.
The size of your down payment is another factor to take into account. The bigger of a down payment you can make, the less you’ll have to borrow. This may allow you to go with a shorter loan term. Once again though, it’s important to keep in mind that the longer you take to repay the money you borrow, the more you’ll end up paying in interest.
Where Can You Get a Motorcycle Loan?
Motorcycle loans are offered by banks, credit unions, and other private lenders. There are two ways that you can obtain motorcycle financing: by going directly to a lender (i.e a bank or credit union) or through dealer-arranged financing. The lender you go through may affect the loan terms you’re offered.
Just as many car dealers will arrange financing for you with a private lender, many motorcycle dealers will do the same. The primary advantage of going with dealer-arranged financing is convenience. You can both buy your motorcycle and obtain financing at the same place so there’s no need to arrange the financing before you start shopping.
An important negative of dealer-arranged financing to think about, however, is the potential dealer markup. Motorcycle dealers typically don’t arrange financing for you for free. They expect to be paid for the service. One way they may do this is to charge an interest premium above the interest rate charged by the private lender.
While a small interest premium may not sound like it would make much of a difference, it will increase the cost of borrowing. Depending on the loan amount and the term, it could increase your monthly payments more than you expected or can afford.
Bank or Credit Union Financing
If you go through a bank or credit union, you’ll have to arrange the financing before you start shopping for your dream motorcycle, but there is an important advantage to this. If you’re pre-approved for a motorcycle loan, you’ll know exactly how much you can borrow. This will help you narrow your search to the bikes you know you can afford, which will save you time.
The primary advantage of going to a bank or credit union for your motorcycle loan is that you may be able to get a better interest rate. Depending on the lender, you may also be able to avoid an origination fee or early repayment fee.
Keep in mind that pre-approval is not the same thing as being approved for a motorcycle loan. Pre-approval means that a lender has done a preliminary review of your financial information. Once you find the motorcycle you want to purchase within the parameters of your pre-approval terms, you then start a formal loan application process.
Depending on your lender, you may be approved for a motorcycle loan within a few minutes or a few days. Your lender could then issue a check directly to the seller or could deposit money into your account so that you can write a check from it yourself.
Where Can You Get the Best Motorcycle Loan Interest Rate?
The less money you spend on interest, the more you can spend on gas or accessories for your motorcycle. If you’re deciding between a bank or credit union for your motorcycle loan, you may be able to get a lower interest rate by going through a credit union.
Because credit unions are nonprofit organizations and aren’t obligated to make profits for investors, they tend to have lower interest rates and fees than banks. In a credit union, the members are the owners, which is why they’re known for their superior customer service.
Motorcycle Loans With Wasatch Peaks Credit Union
If you’re thinking about buying a motorcycle, Wasatch Peaks Credit Union offers a motorcycle loan with a competitive interest rate, a simple pre-approval process, and potentially 100% financing. We also offer flexible financing terms of up to seven years, which is longer than what other lenders offer.
Use our handy motorcycle loan calculator to estimate your monthly payments and find out how long your motorcycle loan could be and find the term that’s best for your needs.