Motorcycle loans 

Whether you plan to use your bike for the work commute or to cruise down the coast on the weekend, a low interest motorcycle loan can help make the task of purchasing one easier.

Let’s take a closer look at motorcycle financing through a personal loan.

How is a motorcycle loan different from a car loan?

While motorcycle loans and car loans share a lot of commonalities - and you can actually use a car loan to finance a bike - there are some important differences. 

For example, price can be a differentiator. Prices for beginner bikes tend to be between $5,000-$10,000, while higher-end bikes can go up to $40,000. Because these price points are generally lower than cars, bike loans tend to have lower amounts and shorter terms than car loans. 

Keep in mind that some car loan lenders have competitive options for bikes that differ from their car loan offerings.

What other costs do I need to keep in mind when buying a bike?

Motorcycles are usually cheaper than cars to run, but do incur their own set of specific costs to consider, including:

• Safety gear

• Bike maintenance

• Registration

• Fuel

• Insurance

• Roadside assistance.

So even though you might benefit from using a motorbike loan, remember to weigh up any additional costs.

What kind of motorcycle loan can I get in Australia?

You can opt for a secured motorcycle loan or an unsecured motorcycle loan. Let’s look at these more closely. 

Secured bike loan - This is the most common type of loan you’ll come across once you start to compare motorcycle loans. Similar to a secured car loan, it will require an asset such as your new bike to be put up as collateral. This means that your lender can repossess your bike if you ever default on repayments. In return, secured loans generally come with lower interest rates than unsecured loans.

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 might have to pay a higher interest rate.

How do I compare motorcycle loans?

When it comes to finding the best motorcycle loan for you, be sure to look at four key things outside of whether it’s secured or unsecured. 

These are: 

• the interest rate 

• fees

• loan term 

• and, repayment features.

Let’s look at these closer.

Interest rate

A bike loan can come with either a fixed or variable interest rate. A fixed interest rate means your rate will not change for the term of the loan and you’ll know exactly what your repayments are. Meanwhile, a variable interest rate can rise or fall along with the market and given this possibility, will often come with more flexible features.

(Keep in mind that the comparison rate is a more true representation of the cost of your loan than the initial advertised interest rate as it factors in fees and other charges you may have with the loan).

Loan fees

Two of the most common fees you’ll find with a bike loan are an upfront application fee and ongoing fees. An application fee is a one-off payment when you first apply. Ongoing service fees are the cost to keep your loan going and are either charged as a monthly service or annual fee. Some other fees you may encounter during your loan include break fees or late payment fees.

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. Keep in mind that a longer loan term means you’ll pay more in interest over the long run.

For example, say you planned to borrow $15,000 to repay over 3 years at an interest rate of 7.99%. According to the Mozo car loan repayment calculator, you will have paid $1,919 in interest by the loan’s end. If you chose to repay the same loan over 6 years, you’d pay $3,244 in interest - an extra $1,325!

Repayment features

Some bike loans come with features that give you a little more flexibility in how you pay off your loan. 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. This can be handy to line up with your own pay schedule or budget. Plus, the ability to make additional repayments can help you save on interest and help pay off your loan sooner. Just remember that if you’re on a fixed rate offer, there may be extra fees should you pay the loan off early.

Another worthwhile feature is a redraw facility, which allows you to redraw any extra repayments to pay for unexpected bills or costs during your loan term.  

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! Before you head online to submit your application, you’ll need to have a few documents prepared beforehand, including:

• Your current source of income - payslips and bank statements.
• Proof of genuine savings - lenders will want to see that you can be responsible with your money.
• A list of any liabilities you currently have - including a mortgage or credit cards.

If you’re ready to finally get your motorcycle, start comparing bike loans right here with Mozo.