two male friends smile and lean on a motorcycle on a fall day after learning how to finance a motorcycle from Gate City Bank

How to Finance a Motorcycle: A 5-Step Guide.

Motorcycles offer an exhilarating way to experience the freedom of the open road, and knowing how to finance one can lead to a buying process as smooth as the ride.

By Matt Simmons – AVP, Senior Personal Lender | Estimated read time: 4 minutes

Whether you’re a new rider looking for your first bike or a seasoned enthusiast ready for an upgrade, we’ll walk you through the steps of securing a motorcycle loan – so you can save time, money and potential headaches.

5 Steps to Finance a Motorcycle:

Check your credit score
Set a realistic budget
Get pre-approved for a loan
Choose your wheels
Close on your loan

Check your credit score

Before you buy a motorcycle, it’s important to check your credit score. This score helps the lender determine your ability to repay, with a higher score typically improving your chances of enjoying better rates and terms. (You can check your score for free using services like Credit Karma or Experian.)

If your credit score could use a boost (if it’s somewhere between 300 and 579), consider working on improving it before applying for a loan. After making sure there aren’t any errors in your credit report, try making these basic lifestyle changes:
- Lower your monthly credit card balance.
- Pay bills on time, even if it’s the minimum payment.
- Keep old credit accounts open, and don’t open new ones.
- Work down debt. (Psst. Our debt management calculators can help!)
The quicker you act, the sooner your credit score will improve – putting you in a better position to secure financing and enjoy the road ahead.

Pro Tip:

To steer clear of late fees, set up automatic payments through online bill pay! And when paying down credit cards or loans, focus on the ones with the highest interest rate. This can save you money over time and free up more funds for your motorcycle purchase.

Set a realistic budget

When you’re looking to finance a motorcycle, it’s also important now how much you can afford. Besides the price of the bike, think about extra costs like safety gear, gas, taxes, insurance, storage and maintenance. These can add up fast, so make sure to adjust your budget.

When it comes time to apply for a loan, you’ll also want to keep your monthly payment below 15% of your monthly income. A down payment of at least 20% of the purchase price can reduce how much you owe and your monthly payment.
Get pre-approved for a loan

Meeting with a local lender to get pre-approved for a motorcycle loan is a smart move, not just because it comes with no obligation – but because it helps you learn how much you can borrow for your bike! Basically, pre-approval shows sellers you’re a serious buyer, which could help you get a better deal when it comes time to make your purchase.

Side note: When working to finance a motorcycle, be mindful of your loan-to-value (LTV) ratio. The lower your LTV, the better. Lenders like a ratio of 80% or less because it’s considered less risky. That’s another reason why a 20% down payment is a good idea.

It’s also worth pointing out that a local lender can often offer better interest rates, more flexible terms and lower fees than a dealership. Just remember that while longer loan terms can lower your monthly payments, they may cost you more in interest. And while a shorter term could save you money in interest, your monthly payments could be higher.

Pro Tip:

Test drive the numbers with our helpful loan payment calculator. And by setting up automatic payments with a Gate City Bank checking account, you could receive a 1% discount!

Choose your wheels

Start your engines – this is the fun part! Once you know how much motorcycle you can afford and have been pre-approved for a loan, it’s time to choose your motorcycle. Again, just make sure the one you pick fits your budget.

Begin by thinking about what type of bike best suits your lifestyle. Are you looking for a cruiser for long highway rides, a sport bike for speed and agility or perhaps an adventure bike for off-road exploration? The type of motorcycle you choose will likely impact its cost, so consider what you’ll use it for and how often you’ll ride.

Also, don’t rush the decision! Take your time to try different bikes, thinking about their size, weight and how they feel. If you’re buying a used bike, have a professional check its condition, and look up its history using online services like Cyclechex or VIN Check.
Close on your loan

Once you’ve picked your motorcycle, it’s time to work with your lender to finish the loan. You’ll start by signing the loan agreement, which includes the amount, interest rate, payment plan and total cost of the bike. You’ll also need to provide documents like proof of income, ID and insurance details.

Review the loan agreement carefully and confirm that all the details are correct before signing. Once the loan is closed, you’ll receive the funds from your lender.

Let’s Ride!

Life is an amazing journey – and a motorcycle is a thrilling way to enjoy it! By following these steps to finance your ride, you’ll be better equipped to buy a bike that meets your needs and budget.

Apply for a motorcycle loan today by contacting one of our experienced personal lenders! They can’t wait to get you out on the open road.