What is the Minimum Down Payment for a Bike?

You’ve been scouring the web for your dream bike. You’ve looked at every make and model and finally landed on “the one.” The question weighing heavy on your mind is, “how much do I need to put down?”

Any major purchase (house, car, boat, motorcycle) conjures up this question. Down payments may be one of the most important parts of purchasing your new bike when you get a motorcycle loan.

To determine the answer to this question, we need to look at a few different things. 

What are your goals?

If your objective is to keep that monthly payment as low as possible, you’re going to need a larger down payment. The less you finance, the less you pay. You’ll also need to factor in your credit history to determine your interest rate, directly affecting your monthly payment. Getting away with a “zero down” situation will require a very good credit rating. 

Use your down payment as a tool to lower risk.

Whether you’re part of the “800 club” or just starting on your credit journey, lowering the risk for the bank is one of those key factors in your decision-making process. Your down payment is a factor that can help the bank look more favorably upon your loan application. 

On the surface, shorter terms lower risk. But, keep in mind that this makes monthly payments higher. The higher the monthly payment, the more risk for the bank. The bank will scrutinize your debt-to-income ratio to ensure that your chances of default are low. 

The age of the bike is a significant factor. The newer the bike, the lower the risk as it maintains resale value in the event of a default. 

How much is a reasonable down payment?

The industry standard is 10%-20% of the purchase price. There is no minimum required. The down payment is a piece of your overall buying and financing decision.

The more you put down, the less you finance, which lowers your monthly payment. The less you put down, the more you need to borrow, which increases your monthly payment. 

Before heading to the dealership or meeting with the bank, take the time to determine how much you can comfortably afford to borrow and the level of down payment you will be using. You can use an online calculator to run those numbers. 

The Bottom Line

Everyone’s financial situation and needs are unique. Utilizing loan and budget calculators upfront will help you make the best decision for your situation. Always ensure that you go into the buying process fully informed. This means knowing the finances and knowing the specs of the bike. 

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