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Do You Need Good Credit to Finance a Motorcycle?

Riding a motorcycle revs up your sense of freedom, but paying for one—not so much. A motorcycle can cost $3,000 or more, which is more than many folks can afford to spend all at once. To spread out the cost of adventure, you might secure a motorcycle loan and make payments every month (with interest). But do you need good credit to finance a motorcycle?

There's no minimum credit score required for a motorcycle loan, but the better your score, the easier it may be to qualify for better rates and terms. In general, a higher credit score will lead to a lower interest rate on your loan and, therefore, less spent on interest charges over the life of the loan. Ride along as we explain how your credit affects motorcycle financing.

What Credit Score Do You Need to Finance a Motorcycle?

You'll have many borrowing options in front of you when buying a motorcycle, but there are three methods you should explore first: Taking out an auto loan, securing a personal loan or getting financed by a dealer. The borrowing process differs for each, and they may even consider your credit in different ways.

Lenders may use different credit scoring models when considering your application. There are even credit scoring models specifically formulated for use by auto lenders. Here are some of the most popular credit scoring models you're likely to encounter when buying a motorcycle:

  • FICO® Score 8 and 9: These are generic scoring models. They're not tailored to auto loans, but an auto loan or personal loan lender might rely on this score when reviewing your loan application.
  • FICO® Auto Scores: Generic FICO® Scores serve as the foundation for these scores, which are designed with auto lenders in mind. A FICO® Auto Score can help provide a more accurate forecast of a borrower's ability to make timely payments on an auto loan.
  • VantageScore® 3 and 4: This scoring model is produced by VantageScore®, a credit scoring agency founded by the three major credit bureaus (Experian, TransUnion and Equifax). The VantageScore® differs slightly from the FICO® Score, but is also used by many lenders.

Both the generic FICO® Score and the VantageScore use a scoring range of 300 to 850, with 300 being the lowest score and 850 being the highest score. The FICO® Auto Score range goes from 250 to 900.

When going over your motorcycle loan application, a lender is free to use whatever credit scoring model it prefers to decide the terms and APR of the loan. In fact, the lender might even look at several credit scores. Therefore, the effect of your credit score on your loan application can differ from lender to lender. If you seek financing through a motorcycle dealer, it might send your application to several lenders, each of which might use a different credit scoring model.

It might sound complicated, but remember that most credit scoring models consider factors similarly—so good credit behavior that lifts your FICO® 8 score is likely to do the same to your FICO Auto Score 8, all else being equal. No matter the model, however, a low credit score might result in a high APR, a larger required down payment, fewer lending choices and even rejection of your loan application.

What Else Do Motorcycle Lenders Look at to Determine Financing?

Other than your credit score, a lender will consider these factors when reviewing your application for a motorcycle loan:

  • Credit history: A lender checks your credit history by pulling your credit report. Information in the report includes how much debt you have, how long you've had credit and how often you pay bills on time.
  • Debt-to-income ratio: This ratio weighs how much debt you owe each month against how much monthly income you have.
  • Down payment: This is the amount of money you offer upfront when you're taking out a loan. For instance, you might put down $3,000 when you're buying a $15,000 motorcycle. A bigger down payment reduces the amount you need to borrow and can mean better terms on a loan.
  • Loan total: This refers to how much money you're borrowing after subtracting the down payment.
  • Loan term: This is the number of months you're given to pay off the loan, such as 36 or 48 months.

A lender also will evaluate specifics about the financed motorcycle. Since the motorcycle serves as collateral on the loan, the lender will want to know some details about it, including:

  • Price of the motorcycle: How much are you paying for your new ride? Is it $4,000 or $40,000?
  • Value of the motorcycle: A lender will compare how much the bike is worth and how much you're paying for it. This math will determine whether you're paying a fair price.
  • Age of the motorcycle: Are you purchasing a new or used bike? A new motorcycle might cost more, but it's also more likely to stand up to wear and tear than a used motorcycle is. On the other hand, a used motorcycle typically costs less than a comparable new motorcycle.
  • Trade-in: Are you swapping an old motorcycle for a new one? If so, your bike's trade-in value will figure into the lending equation.

How to Improve Your Score Before Applying for a Motorcycle Loan

So, you've picked out the motorcycle you want to buy and you've settled on getting a loan to pay for it. What should you do before submitting the application? Here are four steps:

  1. Check your credit report. Read your credit reports from all three credit reporting agencies (Experian, TransUnion and Equifax) to ensure that all the information there is accurate and up to date.
  2. Look at your credit scores. If you know where your scores stand, you can take action to improve them and perhaps improve the odds of getting better loan terms.
  3. Reduce the amount of debt you have. One of the key factors in computing your credit score is your credit utilization ratio. This takes the amount of credit card debt you have, divides it by your overall credit limit and multiplies it by 100 to get a percentage. Lenders usually want to see a credit utilization ratio of 30% or less.
  4. Pay your bills on time. Lenders look closely at your payment history when assessing your loan application. They like to see a long record that's full of on-time payments and lacking red flags like bankruptcy or default. Your payment history is the most important factor in most scoring models and a spotless record can help lift your credit score.

The Bottom Line

Whether you're buying it for fuel efficiency or fun, a motorcycle can be a great complement to the other vehicles in your garage or driveway. Before you fill your closet with leather jackets, though, you should make sure the road to motorcycle ownership is fairly free of bumps by checking your credit score and credit report, and then possibly bumping up your credit score to secure better loan terms. You can also use Experian Boost to potentially raise your FICO® Score.

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