Buying a Motorcycle With a Credit Card: A Complete Guide



Riding a motorcycle is a liberating experience that many people dream of. However, buying a motorcycle can be an expensive endeavor that requires careful financial planning. Using a credit card to finance a motorcycle purchase may seem tempting, but it’s important to understand the pros and cons before swiping your plastic.

This comprehensive guide will walk you through everything you need to know about buying a motorcycle with a credit card, including:

  • The benefits of using a credit card
  • Potential drawbacks to watch out for
  • Tips for getting approved for a credit limit large enough to cover a motorcycle
  • Strategies to minimize interest charges
  • Other financing options to consider

The Allure of Buying With a Credit Card

There are some advantages to charging a motorcycle purchase on a credit card:

  • Convenience: Applying for a credit card is quicker and easier than getting approved for an auto loan from a bank or other lender. If you already have a card with a high limit, you can buy right away without having to wait.

  • Rewards: Many credit cards offer robust rewards programs with sign-up bonuses, cash back, and travel perks. Charging a large purchase can help you rack up serious rewards.

  • Buyer protection: Credit cards provide stronger buyer protection than other forms of payment. You can initiate a chargeback if the bike arrives damaged or if the dealer doesn’t deliver as promised.

  • Interest-free period: If you pay off the balance during the card’s interest-free grace period, you get an interest-free loan for up to 56 days.

  • Build credit: Making large purchases and payments can help build your credit score over time.

Potential Downsides of Using a Credit Card

However, there are also some significant drawbacks when financing a motorcycle with a credit card:

  • High interest rates: Credit cards typically charge much higher interest rates than auto or motorcycle loans from other lenders. Rates of 15-30% are common.

  • Lengthy terms: Most credit cards allow you to pay off a large purchase over many years, which means paying more interest over time.

  • Credit limit requirements: You’ll need a very high credit limit, often $10,000 or more, to charge a motorcycle purchase. Not everyone qualifies.

  • Credit score impact: A high balance can negatively impact your credit utilization ratio, a key factor in credit scoring.

  • Lack of buyer protections: Unlike auto loans, credit card transactions don’t require valid bike titles or have fraud protections.

  • Hard to budget: Minimum monthly payments on a credit card are lower than typical motorcycle loan payments. It can be tempting to stretch out payments longer than you can afford.

Let’s explore these considerations in more detail.

Getting Approved for a High Credit Limit

Very few credit cards have limits high enough to buy a motorcycle outright. According to the Federal Reserve, the average credit limit is about $5,000.

To charge a $10,000 bike on a card, you’ll likely need a credit limit of at least $15,000 to cover taxes and fees. A $20,000 motorcycle may require a $25,000 limit or higher.

Here are some tips to get approved for a card with a higher limit:

  • Maintain a credit score over 700. This greatly improves your chances of approval for premium cards with high limits. Pay all bills on time and keep balances low on other cards.

  • Ask for limit increases every 6 months. Most issuers allow current customers to request higher limits after demonstrating responsible use.

  • Provide higher income documentation. When applying, submit pay stubs, W-2s or tax returns showing your income can support a larger credit line.

  • Apply for secured cards. Secured cards require a cash deposit that becomes your credit limit. This allows access to limits of $5,000 or more, even with poor credit.

  • Consider business cards. Business credit cards sometimes offer larger limits than personal cards, even for new businesses. Build business credit to qualify.

  • Add an authorized user. Become an authorized user on a spouse or partner’s account to benefit from their higher limit.

  • Apply for premium cards. Opt for cards like the Chase Sapphire Reserve or Citi Prestige that are designed for big spenders. These often have minimum limits of $10,000.

With good planning and credit management, you can position yourself to be approved for the higher limit required to charge a motorcycle.

Minimizing Interest Charges on the Balance

Since interest rates are high on credit cards, you’ll want to pay off the balance as quickly as possible to limit finance charges. Here are some strategies to reduce the total interest paid:

  • Make a large down payment when buying the motorcycle. Put at least 20-30% down to keep the balance lower from the start.

  • Pay more than the minimum each month. Pay 3-4 times the minimum payment to pay off the balance faster.

  • Consolidate debt at a lower rate. Use a balance transfer offer or personal loan to shift the balance to a lower APR.

  • Ask the issuer to waive interest charges. It never hurts to call and politely ask them to waive interest, especially if you’ve been a long-time customer.

  • Pay off the balance during the 0% APR intro period. Apply for a card with a 12-18 month 0% intro APR on purchases. Just be sure to pay the full amount before rates increase.

  • Put all bonuses and rewards toward the balance. Rather than spend rewards on other things, have them automatically credited to your balance each month to pay it down faster.

With diligent payments and strategic balance transfers, you can potentially buy a motorcycle with a credit card without incurring overwhelming interest fees.

Other Financing Options to Consider

Using a credit card provides a simpler and faster financing option for purchasing a motorcycle. However, taking out a secured loan directly from a lender or through the dealership often saves substantially on interest while offering other protections.

Here are some other financing options worth considering:

  • Personal loans: An unsecured personal installment loan from a bank, credit union or online lender generally offers lower rates than credit cards. Rates range from about 6-36% based on creditworthiness.

  • Dealer financing: Many motorcycle dealerships offer promotional financing with rates as low as 0%. Even their standard rates are usually under 10%. Down payments are often lower than 20%.

  • Secured loans: A loan secured by the motorcycle itself often has lower rates and minimum credit requirements. The bike serves as collateral.

  • Home equity loan: If you have sufficient home equity, tap into it via a home equity loan, HELOC, or cash-out mortgage refinance at rates as low as 3-6%.

  • 401(k) loan: Borrowing against a 401(k) balance is fast and convenient, but should only be considered as a last resort given early withdrawal penalties.

  • Peer-to-peer lending: Borrow from an individual lender via a P2P platform. Rates can be competitive, but max loan amounts tend to be lower.

Crunching the numbers for the different financing options can lead to thousands in interest savings over the life of the loan.

Is Buying a Motorcycle With a Credit Card Right for You?

At the end of the day, whether or not to fund a motorcycle purchase with a credit card depends entirely on your unique financial situation and discipline.

If you have an excellent credit score, pay all bills on time, keep credit utilization very low, and will pay off the balance within the promotional 0% APR period, using a card may make sense. You can reap rewards and convenience without incurring interest.

However, for most buyers, the double-digit interest rates and drawn-out repayment terms make credit cards a very expensive way to buy a bike. Lower-cost financing translates to more money in your pocket over the long run.

Carefully compare all your options. Calculate the total interest costs over time and structure payments in a way that fits comfortably within your budget. If you need to carry a balance or lack the discipline to avoid late fees, a dedicated motorcycle loan is probably the smarter choice.

Final Thoughts on Buying a Motorcycle With a Credit Card

Riding off into the sunset on a brand new Harley or crotch rocket is an exciting milestone for any riding enthusiast. While charging it on a credit card may seem like an instant gratification solution, it deserves very careful consideration.

With prudent planning, maintaining excellent credit, pursuing a higher limit, minimizing interest, and making disciplined payments, using a credit card is feasible for some buyers. Just be sure to analyze the overall cost difference compared to other financing alternatives before swiping the plastic.

For most people, taking the time to secure lower-rate financing results in greater long-term savings and a more sustainable monthly payment schedule. But with the right prep work and financial diligence, a credit card could make sense under the right circumstances.

Either way, enjoy the thrill that comes with buying and owning your dream bike! The open road awaits.

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