Finding The Right Lender

4 Major Options For Funding A New Motorcycle

When purchasing a motorcycle or other small vehicle (such as a small watercraft), you generally have more options for funding. With an automobile, you're limited to car loans and dealership loans -- but motorcycles are less expensive. Here are a few of the major options and the pros and cons of each.

1. Dealership Loan

A dealership loan is usually the easiest and fastest to get, as you can get your financing when you purchase your motorcycle. Dealership loans do require that you pass a credit check, however, and they may require a certain amount of money as a cash down payment. Dealerships frequently have promotions -- especially during holidays -- for 0% down if you need to get a motorcycle without paying in cash.

2. Personal Installment Loan

Personal installment loans can be used for anything -- including transportation. There is a clear advantage to using a personal loan: because it's an installment loan, your vehicle cannot get repossessed if you fall behind in payments, though your credit may be affected. The rate of your personal loan will vary depending on your credit score, however, and you may be denied if you don't have good credit.

3. Credit Card

A credit card can give you the funds that you need to purchase a vehicle if you can't get funding any other way. For a cheaper motorcycle, this can be a good option... but only if you intend on paying back the credit line quickly. Otherwise this will get very expensive very fast, as a credit card interest rate is much higher than the rate of an installment loan. This is only a good idea if you can't get funding otherwise.

4. Automobile Loan

You can use a bank or credit union automobile loan for a motorcycle, and this is usually one of the cheapest methods of getting a motorcycle. There are only two catches: you will need to have very good credit, and your vehicle will be repossessed if you are late in payments. Some lenders reserve the right to repossess your vehicle if you're even a week or two late in payments, which can be a problem if something as simple as a lost check occurs.

Ideally, you should apply for financing through whichever venues you have access to and then compare the rates that you are offered. A dealership loan will often be the cheapest upfront, but a personal installment or automobile loan will be more affordable long-term. It all depends on your own credit history.