Motorcycle Financing

Buying a motorcycle is a big decision and significant financial expenditure. And, let's face it. Most of us don't have $10,000 or $25,000 in cash lying around.

Financing can be daunting when buying a pre-owned motorcycle, especially from a private seller. Many people believe that non-cash options are unavailable in such circumstances.

The truth of the matter is that financing options are available for most buyers and circumstances.

Types of financing:

• Direct financing
  The borrower applies for a loan directly from the lender, which is a bank or another financial institution. The loan can be obtained before the borrower buys a motorcycle, which gives them a better idea about how much they can spend. Direct financing loans often have lower interest rates, but require more work from the borrower.
• Indirect financing
  The borrower applies for a loan via a third party lender who acts as an intermediary between them and the lender. An example of a third party lender is a motorcycle dealership's finance department. They fill out all the paperwork and submit the application to their partner lenders on the borrower's behalf. Indirect financing loans often have higher interest rates, but the borrower doesn't have to do much work to apply.
• In-house financing
  The borrower applies for a loan that is backed by the motorcycle manufacturer or the dealership itself. The loan application is handled by the dealership's finance department. In-house loans vary in interest rates. The rates and other fees can be especially high if the loan is backed by the dealership. Manufacturer loans sometimes have lower interest rates because of special promotional offers. In general, borrowers should be very careful when applying for in-house financing loans.

Financing Options: Buying a Motorcycle from a Dealership

• Direct financing:
  • Vehicle loan from a bank, credit union or another financial institution
  • Personal loan from a financial institution that offers such loans
• Indirect financing:
  • Vehicle loan from the dealership's partner financial institution
• In-house financing:
  • Loan from the motorcycle manufacturer
  • Loan by the dealership

Financing Options: Buying a Motorcycle from a Private Seller

• Direct financing:
  • Vehicle loan from a bank, credit union or another financial institution
  • Personal loan from a financial institution that offers such loans
• Indirect financing:
  • Harley-Davidson Rider-To-Rider Financing

Using a Personal Loan to Buy a Motorcycle

A lot of people don't know they can use a personal loan to buy a motorcycle. The biggest disadvantage to this option is a higher interest rate. There are many lending institutions that offer personal loans, including:

• Avant
• Best Egg
• LendingClub
• LendingTree
• LightStream
• Marcus
• PenFed
• Prosper
• SoFi
• Upgrade

Harley-Davidson Rider-To-Rider Financing Program

Individuals who are buying a pre-owned Harley-Davidson motorcycle from a private seller can get Harley-Davidson Private Party Financing by applying via a participating Harley-Davidson dealership. The additional perk of this program is that the dealership also takes care of all the paperwork (title transfer, bill of sale, etc.) for the buyer and private seller.

Factors That Affect Loan Qualification

Every financing institution has its own loan qualification requirements. In general, the following factors determine if a lender will approve borrower's application for financing:

• Credit score
• Past payment and borrowing history
• Debt-to-income ratio
• Down payment amount
• Employment status and history
• Value and condition of the motorcycle