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Things to Think About When Financing a Motorcycle

Things to Think About When Financing a Motorcycle

You want to buy a motorcycle but are thinking it’s probably not as simple as walking into a dealership and walking out with a motorcycle…and you would be correct.  Decisions this big require careful planning and consideration due to the several variables that are involved.

Granted, purchasing a motorcycle can be easier than purchasing a vehicle since motorcycles are much cheaper.  In fact, that’s the reason motorcycles are commonly purchased not to mention the fuel savings.  Regardless, there’s still much to think about when making your bike purchase.  So let’s dive into some of the things that need to be thought of before purchasing your bike.

What Is My Price Range? How Much Motorcycle Can I Afford?

The first question a person should ask is how much motorcycle can I afford.  This is the decision that will affect almost every other decision.  However, it is important to realize that just because you can afford a bigger, better bicycle, it doesn’t mean you should spend the maximum amount you can afford.  Frugality is a virtue, unless you have a ridiculous amount of money to spend.  Failure to be frugal can make you “motorcycle poor”…meaning all your money is going towards paying off your bike and you don’t have money to enjoy other things.

First, to determine how much you can afford, use a motorcycle loan calculator and enter the approximate amount you want to spend to determine if you can afford the loan payments.  Of course, you’ll need to estimate the interest rate as well as the length of the loan.   Motorcycle loans typically last from 24 months to 84 months and the longer the loan, the more you’ll pay in interest over time.   Regarding interest rates, at the time of this writing, interest rates are somewhere in the range of 6 to 12 percent depending on various factors such as the borrower’s credit score.

What will I be using the motorcycle for?

Depending on what the motorcycle will be used for, will determine the type of bike that you need.  For example, if you will be riding on your bike to work everyday, you’ll want to think about the ergonomics of the bike.   Use the bike ergo simulator to see what kind of posture you want to have while riding your bike.  If you are only riding your bike once in a blue moon, then ergonomics won’t be as important since any stress placed on your body due to bad posture can be quickly recovered.

Here are the various types of motorbikes that are available:

  1. Standard – a general purpose road bike that provides an upright riding position.
  2. Sport Bike – focuses on speed and the design is made to turn and maneuver at high speeds, however riders are leaned forward creating a potentially uncomfortable posture.
  3. Scooters/Mopeds – A small engine bike made to go short distances with fuel efficiency.
  4. Off Road – Bikes designed to be able to traverse difficult terrain such as mountains or hills.
  5. Touring – These are bikes that are meant to cover large distances and provide an upright comfortable seating position.
  6. Cruiser – think Harley Davidson where the feet are placed more forward with the handle bars being higher and the rider is slightly leaning back.  Made for riding longer distances although not everyone would agree on their comfort level.
  7. Utility – These are bikes that are adapted for very specific purposes.  This is a catchall category of bike.

Insuring Your Bike

When thinking about how much motorcycle you can afford, be aware that the loan payments will only be part of the monthly cost of owning the bike.  Don’t forget about motorcycle insurance which is required by law to operate your bike(in most states).  At minimum, a bike owner must have liability insurance on the motorcycle(unless you live in these states – Florida, Montana, New Hampshire, and Washington).  Each states requirements are different so check with your state’s laws to see what is required.  Then consult with an insurance advisor to determine which insurance is best for your needs.  Regardless of where you live, abundant insurance coverage is a good idea to protect against the possibilities of what could go wrong.

Types of Motorcycle Insurance To Consider

  1. Liability Coverage – Protects against personal liability in the event of an accident to a certain point.
  2. Comprehensive Coverage – Covers damage from weather, theft, or damage from animals.
  3. Collision Insurance – Protects against collisions caused by other motorists.
  4. Personal Injury Protection – Covers injuries of those involved in the accident regardless of who is at fault.
  5. Roadside Assistance – This one is obvious.  It covers costs of getting your bike to a maintenance shop if it breaks down alongside the road somewhere.
  6. Custom Bike Insurance – If you have a custom bike, this insurance will protect against custom parts that break.

Some other things to think about when obtaining insurance is the insured’s age.  If a person is not above age 25, it may be cost prohibitive to get motorcycle insurance.  Also keep in mind that riding a motorcycle is dangerous so certain insurance protections may be more expensive than when driving a regular four wheeled vehicle.

Motorcycle Driver’s License

When determining whether to obtain a motorcycle driver’s licence, be sure to check out your state’s laws and regulations on the issue.  Each state is different.  Here is a great resource for biker’s licenses that lays out the requirements for each state.

Work On Your Credit Score

If you are applying for a motorcycle loan, then be sure to pay attention to your credit score.  This will determine whether you are first, eligible for a loan and second, how favorable the terms of the loan will be.  In other words, a good credit score will help you obtain a loan with lower interest rates.

A good credit score does much more for a person than help them get a motorcycle loan.  A good credit score says your a financially responsible human being and it is simply a good habit to be in.  How serious a consideration is your credit score when purchasing a motorcycle?   Here’s a real life motorcycle credit score example to consider.

What’s the minimum credit score motorcycle lenders require for you to purchase a bike? According to some, a minimum score of 620 is required.


Sure, there are other things to think about such as sales tax and motorcycle registration that can add costs so be aware of that as well.    However, these are the 5 main things every prospective bike owner should be thinking about as they begin the buying process.

  • How much motorcycle can I afford?
  • What type of bike will I buy?
  • What motorcycle insurance is required in my state?
  • What is required for me to drive a motorcycle legally in my state?
  • What credit score do I need to obtain financing?

Once these 5 topics are settled, you’ll be well on your way to cruising down the open road on your motorcycle.

About the Author

This article was written by IQ Calculators.  IQ Calculators provides smarter online financial calculators for the masses.  Check them out!

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