Understanding Motorbike Loans
For most riders, there’s nothing like the freedom a motorbike can offer and for most a motorbike loan is an ideal option for those wanting to buy their first motorbike of upgrade to a larger model.
Unlike car loans, a motorbike can be seen by banks as a ‘want’ or lifestyle asset, so can be assessed differently; So it pays to take your time when applying for motorbike finance and even discuss the details with your finance broker.
If you don’t have the cash readily available, a motorbike loan can help you if you find your dream bike or spot a bargain. A motorbike loan is structured over a set period of time (usually 1 – 7 years depending on your budget) with set repayments you pay back in either weekly, fortnightly or monthly amounts.
Motorbike loan repayments are calculated on the total loan amount borrowed including the loan term, interest rate and any establishment fees.
Different loan terms will affect the total interest you will pay over the loan term, so if shorter term loan repayment fit into your budget, you can reduce your overall total loan repayment significantly.
Things to Check Before Signing Loan Paperwork
- Ask questions.
- Are the repayments affordable.
- Are there extras included in the loan I didn’t know about.
- What is the interest rate
- What is the loan term
- What is the total loan repayment
Many people decide on loans based on Interest Rate alone without really checking the total loan contact. Paying a low interest rate with high fees or surprise insurances could end up costing you more in interest than a moderate interest rate and low fees.
Interest Rates
Interest rates vary from bank to bank depending on the age of the motorbike your buying, your overall loan application which includes your credit score, credit rating, income, debts and loan amount.
Generally motorbike loan interest rates are fixed for the loan term, which can add some comfort in the event of interest rates increasing. Fixed interest rates help you budget correctly for the loan as the repayment will not change over the loan term.
Other Loan Costs
When considering motorbike loans, take into consideration any other loan costs such as fees to repay the loan earlier, late payment fees, monthly service fees and surprise insurance.
Check the loan comparison rate as this will provide you a true rate based on the loan amount, establishment fees and any ongoing costs.
Always read the contract thoroughly to make sure you fully understand the loan you’re entering into and if you’re unsure on anything, discuss the loan contact with your finance broker.