How Much Should a Down Payment on a Motorcycle Be?

A motorcycle down payment refers to the initial amount of money you pay upfront to the seller or lender when buying a motorcycle. 

It is a percentage of the total purchase price of the bike, and the downpayment amount plays a crucial role in the finance of your new two-wheeled adventure.

This article will help you understand the typical amount for a down payment on a motorcycle, along with the impacts of the down payment on financing options and monthly motorcycle loan repayments. 

Key Points

• The larger your motorcycle down payment, the less your motorcycle loan amount will be.
• It’s recommended to have a motorcycle down payment of 10-20% of the purchase price.
• Your motorcycle loan monthly payment should be at most 10-15 % of your total monthly income.
• Additional costs of owning a motorcycle include insurance, maintenance, fuel, and license and registration.

What is an Average Down Payment on a Motorcycle?

It is generally recommended to contribute 10-20% of the bike's purchase price to your down payment. This is often considered a reasonable amount that helps you reap the benefits of a down payment without depleting your savings entirely. 

However, if you can afford to pay more upfront, reducing your monthly motorcycle loan payments or shortening the loan term could work to your advantage.

How Much Does It Cost to Buy a Motorcycle?

The price range for motorcycles can vary significantly, from a few thousand dollars for a used bike to tens of thousands of dollars for a brand-new, high-end model. 

It's important to set a budget and stick to it, ensuring that you can comfortably afford the bike you're interested in. Researching and comparing prices from different dealerships or private sellers can help you find the best deal.

Motorcycle Monthly Payment

Monthly payments for a motorcycle loan can vary greatly depending on several factors. 

Purchase price of the motorcycle

Generally, the higher the motorcycle purchase price, the higher the monthly payments will be. For example, if you were to finance a brand-new motorcycle with a purchase price of $10,000, your monthly payment could be around $200 for a 60-month loan term with a moderate interest rate. 

However, if you were to finance a luxury or high-performance motorcycle with a purchase price of $20,000 or more, your monthly payment could easily exceed $400.

The loan term

The longer the loan term, the lower the monthly payments will be, but the higher the overall interest paid over time. For instance, if you extend the loan term to 72 or 84 months, your monthly payment will decrease, but you will end up paying more in interest over the life of the loan.

Additional Costs of Owning a Motorcycle

When purchasing a motorcycle, it's important to remember that the cost goes far beyond just the down payment and monthly payments. There are additional costs associated with owning and operating a motorcycle that must be taken into consideration when budgeting for your new ride.

• Insurance: $720 per year—Most lenders will require you to carry comprehensive coverage on your motorcycle in order to finance it. Motorcycle insurance rates can vary significantly depending on the type of bike, where you live, and your driving record, so be sure to shop around for the best rate.
• Maintenance: $800 per year—Motorcycles require regular maintenance in order to stay in good condition. This includes oil changes, brake repairs, tire replacements, and more. Depending on the age and condition of your motorcycle, these costs could add up quickly.
• Fuel: $300 per year—Depending on your riding style and the type of motorcycle you own, fuel costs can vary significantly. If you choose a larger bike with a powerful engine, you'll likely find yourself at the pump more often than if you chose a smaller bike with an efficient engine.
• License and Registration Fees: $50 per year—Your state will require you to register your motorcycle each year in order to to ride it legally. This fee can vary depending on your state and the type of bike you own.

Buying a Motorcycle with Bad Credit

If you have bad credit, it's crucial to put down a larger down payment. Lenders may view a larger down payment as a way to mitigate the risk associated with lending to someone with poor credit. 

By putting down a higher percentage, you can increase your chances of securing motorcycle financing.

Can You Afford a Motorcycle? Questions to Ask Yourself

Before buying a motorcycle, consider whether you can afford the financial obligations that come with owning one. Before making a decision, ask yourself the following questions:

1. What Credit Score Do I Need to Buy a Motorcycle?

While there is no minimum credit score requirement to buy a motorcycle, having a higher credit score can often result in better rates and terms on the loan. Take a look at your credit score and consider how it may impact your financing options.

2. How Big of a Down Payment Can I Put? 

Putting a larger down payment on a motorcycle can improve your chances of motorcycle loan approval and provide you with a lower monthly payment. Evaluate your finances to determine how much you can comfortably contribute as a down payment.

3. Can I Use a Credit Card for a Down Payment on a Motorcycle? 

In most cases, you should be able to use a credit card for a motorcycle down payment. However, this may vary depending on the dealer and their policies. Before assuming you can use a credit card, it's best to check with the dealer beforehand.

4. Can I Keep Up With Monthly Payments and Additional Costs? 

Consider not just the monthly payments on your motorcycle loan, but also the additional costs associated with owning a motorcycle. This includes insurance, maintenance, fuel expenses, and potentially storage or parking fees. Make sure you have a realistic budget that allows you to comfortably cover these costs without straining your finances.

Motorcycle Payment Calculation Example

Let's say you're looking to purchase a used motorcycle with a sticker price of $10,000. You've saved up a down payment of $2,000, and you've been able to secure a used motorcycle loan with an APR of 5%. Now, let's calculate your monthly payment based on these figures.

First, subtract your down payment from the purchase price: $10,000 - $2,000 = $8,000. This is the amount you'll need to finance.

Next, let's calculate the monthly interest rate by dividing the APR by 12: 5% / 12 = 0.0042.

Now, we can use a loan calculator to determine your monthly payment. Using the loan amount of $8,000, an interest rate of 0.0042, and a repayment term of, let's say, 48 months, the calculator tells us that your monthly payment will be approximately $182.

How Much Does It Costs to Finance a Motorcycle

When considering financing a motorcycle, there are several factors to take into account, including:

Average length of motorcycle loan

One important factor is the average length of a motorcycle loan. The length of the loan affects your monthly payments and overall interest expense. Generally, a longer loan term leads to lower monthly payments but higher overall interest costs.

Size of the down payment for the motorcycle

A larger down payment can result in lower monthly payments. By putting more money down upfront, you'll reduce the total amount you need to finance and potentially qualify for better motorcycle loan terms.

Whether you get a good APR

The APR (annual percentage rate) for the motorcycle loan is another significant consideration. A lower APR translates to a lower cost of financing the motorcycle. Different lenders offer varying APRs, so it's essential to shop around and compare rates from different financial institutions to ensure you find the best deal.

Your credit score

Your credit score plays a significant role in determining the APR you're eligible for. A lower credit score typically leads to a higher APR, which results in a higher total cost of financing the motorcycle. It's crucial to know your credit score and understand how it may impact the financing terms you qualify for.

Where is the Best Place to Finance a Motorcycle?

When it comes to motorcycle financing, there are several lenders that offer different options to suit your needs.

Credible

Credible offers personal loans from $600 to $100,000, with rates starting at 4.60%. You can use these unsecured personal loans to finance a motorcycle. Credible does not charge any fees, and applying will not affect your credit score. If approved, you’ll sign for the loan and may receive funds as soon as the next business day.

LightStream

LightStream offers personal loans to buy a motorcycle with competitive rates and flexible terms. They provide loans ranging from $5,000 to $100,000, with loan terms of 24 to 84 months. LightStream also offers a Rate Beat Program, where they will beat any qualifying rate from another lender by 0.10 percentage points.

OneMain Financial

OneMain Financial offers unsecured personal loans from $1,500 to $20,000. Repayment terms are from 24 months to 60 months, and interest rates may fall between 18% and 35.99%, depending on creditworthiness. An origination fee of 1% to 10% may apply, although applicants in some states may be asked to pay a flat fee instead.

Final Word: Estimating Your Motorcycle Payments

A motorcycle down payment is an essential aspect of financing your dream bike. It can help lower your monthly payments, improve loan terms, and demonstrate your commitment to the purchase. It's crucial to plan ahead, consider your budget and financial situation, and work with a reputable lender to ensure a smooth and successful motorcycle buying experience.

Explore top motorcycle lenders with Finimpact today!