Broadly, there are two types of motorcycle loans: secured and unsecured. Under these two umbrellas, you’ll find specific loans, each with its own benefits and drawbacks.
Unsecured motorcycle loans
Unsecured motorcycle loans are personal loans, so they don’t require collateral. Personal loans provide a lump sum of money that you can use for almost everything, including a motorcycle.
Compared to secured motorcycle loans, unsecured motorcycle loans usually have higher interest rates and more fees. On the plus side, unsecured motorcycle loans don’t require a down payment. They can also be easier to find than traditional, secured motorcycle loans.
Secured motorcycle loans
A secured loan is backed by collateral. In this case, it’s your motorcycle. If you don’t stick to the terms of your loan, the lender could repossess your bike.
Secured loans are less risky for the lender because it can recoup some of its losses if you don’t pay back your loan. As a result, secured loans tend to have lower APRs and can be easier to get if you have bad credit.
Unlike personal loans, many secured motorcycle loans require a down payment. That is, unless the lender or dealership is offering a “no-money-down” promotion.
Manufacturer loans
If you’re buying a brand-new motorcycle, you may want to look at a manufacturer loan. A manufacturer loan is one offered by the brand of your motorcycle, such as Honda or Suzuki.
Manufacturer loans tend to have some of the most competitive rates, especially during the holidays. It’s common for manufacturers to offer deals and buyer incentives during this time.
Bank motorcycle loans
Some banks can provide motorcycle loans, but they might refer to them by a different name. One institution might offer motorcycle loans under their RV loan product. Others might call it a powersport loan.
As an example, First Citizens has motorcycle loans designed specifically for motorcycles. Regions, on the other hand, lumps motorcycle financing with RVs and offers it as a secured, personal loan.
Credit union motorcycle loans
Credit union motorcycle loans are similar to bank loans, but because they’re nonprofits, they generally have lower APRs. Additionally, you must be a credit union member to borrow.
Digital Federal Credit Union (DCU) offers motorcycle loans with low rates with a term of up to 60 months. You can also finance up to 125% of your bike’s value to pay for related expenses like protective gear.
In-house financing
Of all your secured motorcycle loan options, in-house financing will probably have the least attractive terms. You might know in-house financing as “buy here, pay here.” These loans target bad-credit borrowers through lax eligibility requirements. In turn, they come with much higher APRs.
