5 Tips for Financing Your Motorcycle

Like it or not, the backbone of American consumer culture is financing. It’s a honeytrap, that nice new bike, gleaming with promise of great times, sitting there on the showroom floor. It can turn from fantasy ride to literally yours for a simple signature or three, and 24, 36, or more E-Z monthly payments. So, what’s not to like? The unassailable logic of living for today has some merit. You’re only young once; there are only so many good summers in life; and friendships, work or school transportation needs, plus unique living environments, sometimes align just right for a motorcycle ownership. And maybe that’s right now. However, if you can’t write a check for a new bike or borrow from friends or family to cover the purchase, that basically leaves financing. Here are five straight-up tips to consider when heading down this path.

1. Learn and optimize your FICO score

In 1956, Fair Isaac Corporation (FICO) developed a credit model showing how individual consumers – you, for instance – measure up in terms of your risk as a borrower. The higher the score, the more favorably a lender will regard you, and traditionally, the lower the interest rate (“APR”) you will be charged for a loan.

Happily, for those with good FICO scores, they will often qualify to borrow more money, and at a lower interest rate. This means that, for instance, taking out a loan for a supersport, dirt bike, or ADV (or any other machine, actually) will cost them less out of pocket, either monthly or by the time their loan is paid off. Incidentally, the FICO index ranges from about 250 on the low side to 900 on the top end. Typically, to earn good terms you’ll want a score of 650 or higher.

Rate variations may occur because certain models are in greater demand, or because temporary finance offers are in place that will help push prior-model years out the door, when the sell-through performance of that model hasn’t been strong enough during peak season.

Another tactic is to stimulate sales on a seasonal basis, such as touring bikes during summer. As part of their advertising kits they may receive, local dealers may further choose to run radio, TV, social media, or print advertising calling attention to these offers. You may also learn about them on your dealer’s website – or maybe if the program is regional or national – on the manufacturer’s website. When you’re shopping (or getting ready to shop) for a new bike, dig around, and call your dealer’s sales department to learn of current offers on certain model and model years.

3. Negotiate like a grizzly

An unfortunate part of the trading of big-ticket items (homes, jobs, vehicles, land, etc.) is negotiating over price. It’s stressful for all parties, but ultimately is probably good for free-market economy principles. If you’re attempting to negotiate down the price of a bike you want, you may well encounter well-practiced dealer strategies to thwart that attempt. But here’s an alternative you can suggest: Instead of selling the product below MSRP, a dealer may have room to alter the interest rate, to offer you an extended warranty or discounts on accessories, a period of free servicing, or even to reduce or waive setup costs or the dreaded “dealer markup” sometimes written onto the hangtag.

Quite seriously, it’s a game, a battle, and a dance, all in one. The dealer likely knows more than you do, but even so, consider what’s on the sales tag to be merely the dealer’s wishful thinking. You can counter it at any time. What are they going to do, tell you to leave? Not a chance.

4. Consider different lenders

You do have a choice here, and you certainly do not have to take what is offered. Your options for borrowing are broad and may include “captive lenders” (owned by or affiliated with the motorcycle company), your credit union, or a choice of local banks. Motorcycle dealers (especially the finance staff) are experts at working with them all, and they should compare all options to find you the best rate and terms. While you’re at it, find a loan with no prepayment penalty. After all, next year you may get a raise at work, gain a new client, or earn a job promotion. Great-aunt Millie may leave you some dough. Or you may win $100 Million after spontaneously buying a lottery card at the Piggly Wiggly while you’re in for beef jerky and a Rockstar.

Incidentally, let the dealer pull your credit only when you’re ready to buy. Doing so earlier will be good for them, but not necessarily for you. Too many credit hits can be bad for your credit rating, which brings up a good point: You’ll not help your case as a borrower by opening numerous credit cards or applying for multiple loans right in advance of your motorcycle loan application. This sends a message to lenders that you’re looking everywhere for money – and it’s not a good look.

5. Be ready to walk – and then do it.

This is your final trick, and the most important one, in your negotiation arsenal. The dealer needs your business, well, to stay in business. Do you need a new motorcycle just as badly? You be the judge. But in sum, it’s like the storied gunfight in the O.K. Corral; who’ll blink first? This is just one true example, but while negotiating for two new motocross bikes, we reached a stalemate with the sales consultant. Excusing ourselves, we walked to the parking lot, sat in our truck, and called another dealer located an hour away to discuss the same models. Within minutes, the original sales consultant was at the driver’s window ready to do the deal on our terms. Yeah, baby!