A new motorcycle can be a big purchase, though typically not as large as a car or truck. This means there are a few more financing options than for other vehicles, including using a credit card. While there’s no law against financing a bike with a credit card, and most bike dealers are happy to take plastic, it probably will lead to paying more interest charges.
Although you may pay more in interest when using a credit card to purchase a motorcycle, it can be done.
No Credit History
If you have a credit card but no loan history, you might think you won’t be able to get a motorcycle loan. Perhaps you’ve been offered or have a card with a high limit and are considering using it for a motorcycle. Before you make such a major purchase on credit, you should investigate all other forms of financing. Motorcycle dealers often work with a number of financial institutions to help you arrange for financing, or the manufacturer might offer a special rate. Another option is a personal loan from a bank or credit union where you have a checking or savings account.
Compare Interest Rates
Most credit cards are not suitable for long-term financing, especially those with an interest rate above 15 percent. If you only make the minimum payment each month, you could end up paying hundreds or thousands of dollars more in interest than what you would pay by taking out a loan with a lower interest rate and a fixed number of payments.
Creditcards.com gives the example of an $8,000 motorcycle actually costing $19,615 when minimum monthly payments of about $200 are made. The same $8,000 bike would cost $9,000 when financed with an 8 percent interest rate paid off at a rate of $250 per month over three years. The best way to avoid this interest gap is to pay off the credit card as quickly as possible by paying more than the minimum each month.
Consider Motorcycle Ownership Costs
Before you finance a new motorcycle with credit cards or a loan, be sure you’ve budgeted for all the add-on costs. Besides paying on the loan or credit card each month, you’ll need to pay for insurance, maintenance and fuel. You’ll also need to buy all the gear that motorcycle riding entails, including a helmet and protective clothing.
Alternatives to Financing
After comparing different types of motorcycle financing and seeing how the repayment would affect your budget, you might decide it’s not the right time to buy. This could mean postponing your dream until you save enough money to buy the bike with cash or at least make a large down payment so that you must finance just a portion of the entire purchase price. You also can work on building your credit history by using your credit card wisely and making timely payments.
- Bankrate: Unsecured Motorcycle Loans
- LendingTree: Bad Credit Motorcycle Loans
- CreditCards.com: Weigh All Options When Financing Expensive Purchases
- Nationwide: Guide to Buying a Motorcycle
- Credit Card Insider: How To Purchase A Car On A Credit Card
- Financial Industry Regulatory Authority. "How Your Credit Score Impacts Your Financial Future." Accessed May 4, 2020.
- Experian. "How Is Your Credit Score Determined?" Accessed May 4, 2020.
- Insurance Information Institute. "Facts + Statistics: Motorcycle Crashes." Accessed May 4, 2020.
Catie Watson spent three decades in the corporate world before becoming a freelance writer. She has an English degree from UC Berkeley and specializes in topics related to personal finance, careers and business.