Regardless of whether you plan to use your bike on your daily commute or just to cruise around on the weekend, a low interest motorcycle loan can help make it happen. But how do you know when you’ve found a winner? To help we’ve answered all the commonly asked questions when it comes to finding the right bike loan for you.
Motorcycle loans or personal loans, is there a difference?
Not necessarily, you can use personal loans for lots of different things, like a home renovation, wedding, or yes, to buy your dream bike. But there are also specific loans designed just for bikes and other speciality vehicles, like scooters.
What kind of motorcycle loan can I get in Australia?
While motorbikes come in all shapes and sizes, you’ll find that bike loans generally fall into two major categories, secured and unsecured. Knowing the difference between the two is important, as you’ll need to choose the type of loan that best suits your needs.
Secured bike loan - This is the most common type of loan you’ll come across once you start to compare motorbike loans. Similar to a secured car loan, it will require an asset, like your new bike, to be put up as collateral. This means that your lender can repossess your bike if you ever default on the loan, but in return, secured loans generally come with lower interest rates.
Unsecured bike loan - On the other hand, if you opt for an unsecured bike loan, you won’t need any big asset for security, but it does mean that you may have to pay a higher interest rate.
Can I buy a motorbike with a car loan?
Yes you can! If you are thinking of taking out a loan to buy a motorcycle, you will have the choice between a personal loan or car loan. There aren’t any big differences between the two loans, other than the fact that a car loan can only be used to buy a vehicle, whereas a personal loan can be used to fund things like a holiday or renovation as well.
Can I still get a bike loan if my credit is bad?
Yes, but again, you’ll need to check with your lender. If you’ve got a bad credit history and are looking to apply for a bike loan, you’ll soon find that the interest rates on offer are pretty steep.
This is because of the risk lenders are up against once you borrow money. So it might be worth repairing your credit score before putting in an application.
How do I find the best motorcycle loan for me?
While picking your dream bike was the easy (and fun) part, now it’s time to choose the right loan to finance it. And when it comes to finding the best motorcycle loan, you’ll mainly need to look at three things:
The interest rate
The interest rate is possibly the first feature you’ll compare in a bike loan and are either a fixed or variable interest rate. A fixed interest rate means your rate will not change for the life of the loan, so you’ll know exactly what your repayments will be, while a variable interest rate can rise or fall along with the market and often offer more flexible features.
Two of the most common fees you’ll find with a bike loan are upfront application and ongoing fees. An application fee is a one-off payment when you apply for the loan. Ongoing service fees are the cost to keep your loan alive and are either charged as a monthly service or annual fee. Some other fees you may encounter during your loan include discharge or late payment fees.
The comparison rate
The comparison rate is a more ‘true’ representation of the cost of your loan. This is because not only does it factor in the interest rate, but also fees and other charges you may have with the loan. Just remember that the comparison rate can only give an estimate, your actual comparison rate will depend on your specific loan terms.
What other motorbike loan features should I compare?
It’s safe to say that you’ve probably already spent hours researching the type of bike you want and it’s just as important to do the same with your bike loan. So take time to compare the following features as they could help you save some cash in the future.
The loan term
Bike loan terms are usually between 2-5 years, however it is not uncommon for borrowers to extend the loan over 5 years. Just keep in mind this will mean you’ll pay more in interest over the long run.
For example, say you planned to borrow $15,000 to repay over 3 years on an interest rate of 7.99%. According to the Mozo car loan repayment calculator, you will have paid $1,919 in interest. If you chose to repay the same loan over 6 years, you’d pay $3,244 in interest - an extra $1,325!
Some bike loans come with pretty handy features that give you a little more flexibility in how you pay off your loan. If you’re keen to pay off your loan faster, having an extra repayments features allows you to make additional repayments, helping you save on interest. Just remember that if you’re on a fixed rate offer, there may be extra fees if you pay the whole loan out early.
Another handy feature is a redraw facility, which allows you to redraw any extra repayments to pay for unexpected bills or costs during your loan term.
You’ll also often have the option to pay off your loan on a repayment schedule that suits your budget best. Depending on the lender and type of loan you choose, you may be able to make your repayments on either a weekly, fortnightly or monthly basis.
Should I use dealer finance instead of getting a bike loan?
If you are planning to buy your car through a dealer, you are able to use the finance option provided by the dealership. But before you take the offer, it’s worth shopping around and comparing all options first to make sure that you’ll be getting the most competitive deal.
Sound like a lot of work? We've made it easy without car loan comparison calculator car loan comparison calculator.
I plan to buy a motorbike privately, can I still get a bike loan?
Yes, many lenders will still offer you a bike loan if you plan to buy a motorcycle through private sale, but they may want to inspect the motorcycle before issuing the loan to you.
Are there any other costs I should know about before applying for a motorcycle loan?
Although motorcycles are somewhat cheaper to run than cars, there are a few other costs you’ll need to factor into your budget before you head online to apply. Having a comprehensive motorcycle insurance policy on your side will really help safeguard yourself on the road. You might also want to sign up for roadside assistance, which helps you in circumstances like a breakdown or flat tyre. Regular services, rego, license and test fees along with good quality motorcycle gear will also need to be factored into your budget.
What do I need to apply for a motorcycle loan online?
Once you’ve found the loan that’s right for you, all that’s left to do is apply! But before you head online to submit your application, you’ll need to have a few documents prepared beforehand, including:
- Your current source of income - Have your payslips and bank statements ready because lenders will want to see that you have a steady source of income you’ll use to make your repayments.
- Proof of genuine savings - Lenders will also want to see that you can be responsible with your money, so you should have proof of savings, for example a bank statement that shows regular deposits to your savings account.
- A list of any liabilities you currently have - You should be honest and upfront with your lender about any other debt you may have that might impact your ability to repay your motorbike loan, like a mortgage or a credit card.