Motorbike loans: the ins and outs of funding two wheels

Got an itch to hit the open road on two wheels this summer? Or maybe you’ve been dabbling with the idea of scooting to work? 

Whatever the reason, when it comes to financing the purchase of a motorcycle (or motorised scooter) it's best to know what options are out there - because the truth is it may not be as straightforward as getting a car loan.   

According to recent stats from the Federal Chamber of Automotive Industries (FCAI), 86,239 new motorcycles, scooters and off highway vehicles were sold between January and September of this year, an increase of 6,616 year on year.   

“This steady growth of 8.3 per cent over the same period in 2020 shows us that there is strong demand from buyers who want to use a motorcycle as their first choice for the daily commute and for recreation,” FCAI chief executive, Tony Weber said.

Plus with the FCAI’s ‘Ride Your Motorcycle Week’ around the corner (29 November to 5 December), Weber is hoping that more Aussies will hit the road soon.  

“When you’re on the bike, there’s nothing else like it,” Weber said. 

“But life gets in the way. Ride Your Motorcycle Week is just a little extra push to get your bike serviced ahead of riding season, take the bike to work or take the long way home, take the day off and reconnect or just go and have an adventure. This is the week to start doing it.”

How much does a motorbike cost? 

There’s no denying that motorcycles can be cheaper than cars, so you may not need as big a loan. In saying that, there is still some variation in price between different types of bikes, and some can be pretty costly. 

Take the popular brand Yamaha, for instance. While you can pick up a brand new motor scooter for $3,799**, prices also got up to almost ten times that to $37,049** in the Supersport motorcycle range.

Also, bear in mind there are additional costs that come with owning a motorcycle such as motorcycle insurance, licence fees (and course costs), riding gear, regular servicing and any repairs that need to be done. So take these into consideration when weighing up the overall cost of bikes you’re comparing. 

Which providers offer motorbike loans in Australia? 

While not all car loan lenders offer motorcycle loans, there are still a range of providers that offer bike funding to Aussie riders. Here’s a handful to consider: 

Wisr Recreational Loan: 

• Fixed rates from 6.49% p.a. (7.31% p.a. comparison rate*)
• Borrowing amount from $5,000 to $64,000 

Plenti Motorbike Loan: 

• Fixed rates from 6.39% p.a. (6.39% p.a. comparison rate*) 
• Borrowing amounts from $2,001 to $50,000 

OurMoneyMarket Motorbike Loan Offer: 

• Fixed rates from 5.35% p.a. (5.65% p.a. comparison rate*) 
• Borrowing amounts from $2,001 to $75,000 

SocietyOne Motorbike Loan

• Fixed rates from 4.95% p.a. (4.95% p.a. comparison rate*) 
• Borrowing amounts from $5,000 to $70,000 
  

Don’t forget that each loan comes with its own set of fees which may include upfront application or establishment costs, ongoing service fees and even exit or early repayment penalties if you pay down your loan ahead of time. So when choosing the loan for you, ensure that you weigh up the entire cost of the loan, not just the comparison rate.  

How does a motorcycle loan work? 

Like a car loan, a motorcycle loan is usually a type of secured personal loan. With these types of loans you must secure an asset against it (the motorcycle you are purchasing) in order to borrow the funds. 

Often you’ll have the choice to pay off your loan from one year to ten or more years in regular repayments (e.g. on weekly, fortnightly or monthly basis). In some cases you may be given the option to make extra repayments, meaning you have the ability to pay down your loan ahead of time. 

Once you pay off the money you owe, the lender no longer holds the motorcycle as security and the vehicle is yours. On the other hand though, if you default on your loan, the lender can seize the motorcycle as collateral. 

What other options are there for financing a motorcycle? 

The truth is, if a motorcycle loan doesn’t sound like the right option for you there are other options:

• Motorcycle financing: Some motorcycle dealerships may offer financing options when you buy a vehicle with them. This could be a good option, as you can apply and get approval essentially on the spot. However, while some of these loans come with low interest rates, some have balloon payments attached to them - a lump sum you’ll have to fork out once the financing period is over. 

• Unsecured personal loan: If the idea of putting your bike up as collateral makes you feel uneasy, this option allows you to borrow without putting up an asset. Just bear in mind, unsecured personal loans often come with higher interest rates than secured options. 

• Savings: Whether you have a lump sum sitting in your savings account or your term deposit is about to hit maturity, don’t be afraid to use the money you actually have -  if you have enough! This way you’ll avoid things like pesky interest repayments and loan fees. 

• Credit card: Only need to borrow for part of your bike and can cover the rest with your savings? Using your credit card might be an easy option. But remember, credit cards can come with high interest rates, so before using your plastic ensure you are able to pay down the amount you spend to avoid forking too much out in interest charges.  

Still deciding whether a motorcycle loan is for you? Want to see how current unsecured personal loans compare? Check out the options below….

6 top tips to know before purchasing a motorbike

1. Settle on a budget and stick to it: Be sure to have a clear idea in your mind of how much you want to spend on the bike, taking into account extra costs like insurance and gear. Don’t allow yourself to exceed your limit.

2. Check your credit rating: The key to being approved for any sort of lending is knowing your credit rating, because in some instances the lower your rating the lower your rate. If your credit rating isn’t healthy right now, it might be worth holding off on applying for a loan until you have strengthened your credit history by paying off your current debts on time. 

3. Research your bike funding options thoroughly: Weigh up which funding option suits you best, whether it’s a motorcycle loan, using your savings or using your credit card. Do thorough research, weighing up the pros and cons of each option. 

4. Find a lender that suits you: There are a range of Aussie lenders out there from banks and credit unions to online lenders. Along with things like interest rates, fees and repayment options, think about how you’d like to manage your loan - do you value the ease of online transactions or do you prefer to have access to a branch? 

5. Know what you need before you apply: It’s crucial to be prepared for what a lender may ask for on an application for a motorcycle loan. Ensure you have a few forms of ID (licence, passport, medicare etc.), your employment details (name of employer, their contact details and payslips), your financial details (income, assets, debts and liabilities) and the registration number of the bike you intend to purchase. 

6. If you go secondhand - do the right checks: If a brand new motorcycle or scooter isn’t on the cards and you’re opting for pre-loved, it’s important to get a mechanic to do the appropriate checks before you ride off into the distance. That way you’ll avoid taking home a lemon! 

If you’re thinking a car is more your speed jump over to our car loans hub for more providers, guides and all the latest car news!   

** Prices according to Yamaha Motors Australia at time of writing: 22/11/21