How to Finance a Used Motorcycleby Brandon M. Dennis
You can secure financing to buy a used motorcycle through a dealer, credit union or bank. Some dealers such as Harley-Davidson will even provide financing for you to buy a used motorcycle from a private seller.
Financing anything through a dealer generally requires the dealer to obtain a loan from a bank, which the dealer then passes on to you. The dealer owns the bike, and you have to make payments to it until it is paid off and you own the title. This method is usually more expensive, as you are dealing with a middle man who may charge extra fees. You are usually better off securing finance from a different source, such as a credit union or bank.
If your credit scores are low, a dealer may be the only source willing to risk financing you, because the loan will be secured with the bike that will be repossessed if you fail to make payments.
If you don't already have a relationship with a credit union, call around to those in your area or inquire online. Ask them if they will give you a loan for a used motorcycle -- explain the details such as the cost -- and if they say no, move on to the next one. For a small loan, such as for a used motorcycle, you can often get a better deal at a credit union compared to a bank or dealer.
This method is probably your best chance at securing a lower interest rate compared to the others, and considering the size of the loan, the credit union is likely to grant you the loan without an onerous process.
Your bank may be hesitant to give you a loan for a used bike or it may have strict rules to follow. For example, some banks will only loan you the money if you're buying the motorcycle at or below Kelley Blue Book value. You may have better luck applying for a personal loan from the bank, as this kind of loan will likely be free of these extra restrictions; it shouldn't be too hard to get the bank loan you a few thousand dollars for a used bike.
Many local Harley-Davidson dealers are already participating in a program called Rider-to-Rider, which provides financing to purchase a used Harley-Davidson motorcycle from a private party that has made contact with the dealer and expressed an interest in selling a bike. The company will even do a complete inspection and maintenance check on the bike before you buy it, so you can be sure that it is functioning and in good condition.
In order to secure a loan for your used motorcycle, you'll need to demonstrate a reliable source of income by providing at least two consecutive pay stubs and/or W-2s, as well as your Social Security card and proof of residence. The lending agency you choose will check your credit score to ensure that you have a reliable history of paying your debts and then it will approve or deny your loan based on its risk assessment. It is also possible that the lending agency will approve your loan but will limit the amount of money that you can receive or set other restrictions or stipulations in your loan agreement.
Don't rush to obtain financing before doing your homework. If you apply for a loan and get turned down too many times, it can damage your credit scores, which will make things even more difficult in the future.