Review and compare motorbike loan options
Are you ready to ride on the open road? If so you might need a loan to get started. Take a look below to find out what financing options you have so you make the right choice.
If you’re ready to buy a motorcycle and you’ve opted to finance it using a loan then it’s vital that you get your hands on the right loan. Even though a motorbike may cost less than a car the overall cost quickly adds up when you throw in riding gear, licence fees and getting some insurance. It’s important you get a loan for the amount you really need and avoid coming up short when it matters most when buying a used or new motorcycle.
How do motorbike loans work?
A motorcycle loan is basically the same as a car loan. You choose either a secured or unsecured loan. With a secured loan you risk losing your bike as it becomes the guarantee you’ll pay back the loan. One difference is that generally a car loan can only be used to purchase a car. Motorcycle loans are often more flexible and can be used for just motorcycles. The loan term is also flexible. The loan period will be between 1 year and 7 years.
How big does a motorcycle loan need to be?
The amount a motorcycle is going to cost you depends on a few things. While it’s definitely true that motorbikes are cheaper than cars in terms of actual purchasing price (even a brand new motorbike will cost less than $10,000) there are other costs you need to remember. The main ones are insurance, riding gear, and licence fees. There may be other fees you need to pay too. Whether you can borrow all the money you feel you might need, or just enough to cover the asking price of the motorcycle, depends on the lender. Always check to make sure how much you can borrow and compare it to how much you think you need.
What you should look for in a motorbike
When you’re on the hunt for the ideal bike there are a few things to keep in mind.
The model of the bike
Ask yourself what kind of bike you really want. There are many different options out there. You can buy a cruiser like a Harley Davidson, or a sports bike if you’ve got a need for speed. If you’re going long distance a lot then get a touring motorbike. There are also dual sports bikes and standard motorbikes. If you want something cheaper then go with a scooter or a postie motorbike.
The engine capacity
Another important factor is the engine capacity. Take a look at the law around the engine capacity that you can have depending on your licence. You may end up purchasing a bike that you can’t legally ride. In New South Wales for example the bike has to be featured in the guide Approved Motorcycles for Novice Riders.
The feel of the ride
You should always take a bike for a test drive if you can, just like you would with a car. Get a feel for it and see how it handles and how it accelerates. These are the factors that should be on your mind. Ask yourself these questions, consider the answers, and get the bike that’s right for you.
What to consider when comparing different motorbike loans
When you take out a motorcycle loan you need to compare different options. Here are the things you need to think about when looking at different loans and comparing them.
- How much money do you need?
Always take a look at the minimum and maximum amount of money you can borrow when comparing your choices to get a loan with an amount that’s right for you.
- How long does the loan term last?
When you take out a fixed rate loan the term period will usually be between one and five years. When taking out a variable loan the term will usually be between one and seven years.
- Do you need a secured or unsecured loan?
When you take out a secured loan you offer up your motorcycle as a guarantee in case you default on the loan and can’t make the repayments. An unsecured loan has no such guarantee in place. If you need to borrow more than the initial cost of the bike or want to have more flexible repayment options then you should opt for the unsecured loan.
- What is the interest rate?
The interest rate on the loan is a significant factor in determining the actual total cost of the loan. Your loan interest rate will be either fixed or variable. Variable rates can go up or down and a fixed rate stays the same for the entirety of the mortgage.
- Are there any fees?
When taking out a loan you may be met with a range of fees that are paid upfront or charged periodically. These fees are used to set up the loan and pay the administrative costs associated with managing your loan. Always take a look at the fees so you can understand how much the loan will really cost you.
- Are you able to repay the loan sooner?
A great way to bring down the interest you pay on your loan, and the total cost of the loan with it, is to make extra repayments and pay the loan off faster. Not every lender lets you do this however. If you would like to make extra repayments then stick with a lender who lets you.
Things you should avoid
Don’t borrow more than you can afford to repay: When taking out a loan really think about how much the loan will actually cost you. Consider the fees and rates before applying for the loan. Also think about how much you will be repaying and how long you’ll be paying back the loan so you can budget around these repayments.
Don’t apply for an overly restrictive loan: Some loans may have restrictions put on them that can prevent you from saving money and paying back the loan before it’s due. You should always make sure you know if you are able to repay back the loan sooner or if you’ll be charged a fee for this.
How to apply for a new motorcycle
Start out by comparing the different loan options you have available. When you’ve got the right loan ready you can apply directly by clicking the “Go to Site” button to be taken to the online application form.
Different lenders will have different eligibility requirements but generally you need to be an Australian resident or citizen who is over 18 years old and has a good credit rating. If you’re going for a secured loan then you’ll find restrictions placed on the loan about which motorcycles are eligible. Make sure that the bike you have in mind can be covered by your chosen loan.
When you’re ready to apply for a loan you need to have the following documents at hand ready to go:
- 100 Points of ID: This is your proof of identity and it can be your passport, driver’s license, or any other form of ID you have.
- Proof of employment: You need to provide proof that you are employed such as your employers name and contact details. You also need proof that you receive the wage you say so you need some payslips to hand.
- Financial details: You’ll need information about your finances including assets, debts, income, and liabilities. If you’re self-employed then you need to have more financial documents to hand.
- Information on the bike: Lastly you’ll also need registration details and other information about the bike if you haven’t received pre-approval for the loan.