You’ve found the perfect motorcycle but need funding to purchase it. Motorcycle loans are an option, or you can use a personal loan to cover the cost. In this guide, you’ll learn more about the differences between the two, the benefits and drawbacks of using a personal loan to buy a motorcycle and other funding options that could work for you.
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Can You Use a Personal Loan to Purchase a Motorcycle?
In short, yes. You should also understand how the two differ before deciding which is best.
Motorcycle loans are secured, which means the bike is used as collateral and can be repossessed if you fall behind on the payments. But a personal loan is unsecured and doesn’t require collateral.
Pros of Using a Personal Loan for a Motorcycle Purchase
- Flexibility: Personal loans can be used however you see fit. This means you can allocate a portion of the funds to cover the cost of the motorcycle and spend the rest elsewhere.
- No Collateral: The lender can’t seize the bike, even if you stop making payments. But you’re likely to damage your credit health.
- Quicker Access to Funds: Several online lenders offer same-day approvals and funding as soon as the next business day.
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Cons of Using a Personal Loan for a Motorcycle Purchase
- Higher Interest Rates: Personal loans often come with higher interest rates than motorcycle loans as they aren’t backed by collateral.
- Higher Risk of Default: There’s a greater chance you’ll fall behind on the loan payments, especially if the loan term is short and you get a high interest rate.
- Shorter Repayment Terms: Most personal loans come with a three to five-year repayment period, which equates to a steep monthly payment that could stretch your budget too thin.
- Harder To Qualify For: Since personal loans are unsecured, lenders have more to lose if you default on the loan agreement. In turn, their qualification criteria could be more stringent. And if you have a lower credit score, the down payment requirement could be higher, or you may be denied a personal loan altogether.
Where Else Can You Get a Motorcycle Loan?
- Auto and Motorcycle Dealerships: If you’re planning to get a bike through a dealership, they may offer in-house financing. Be mindful that you’ll generally need good or excellent credit to qualify for the best loan terms, and the dealer may require a down payment.
- Banks and Credit Unions: You could have luck getting a secured motorcycle loan from a bank or credit union. They typically come with extended repayment terms and competitive interest rates as they pose less risk to the lender than an unsecured personal loan.
- Manufacturers: In some instances, securing motorcycle financing from the manufacturer (if available) could land you a better deal as they often offer incentives on both new and used bikes.
- Online Lenders: Some offer personal and motorcycle loans at competitive rates.
If you’re looking to refinance your current motorcycle loan, consider using a platform like Auto Approve to connect you with an extensive network of banks and credit unions that offer great rates on both auto and motorcycle loans. Visit their website or submit your details via the online form for more information on how it works.