Not necessarily. You can use personal loans for lots of different things, like home renovations, weddings, holidays, or definitely to buy your dream motorcycle. If you are specifically in the market for a bike, there are also loans designed just for bikes and other speciality vehicles, like scooters (as well as loans for other vehicles like caravans).

While motorbikes come in all shapes and sizes, you’ll find that bike loans generally fall into two major categories. You can opt for a secured motorcycle loan or an unsecured motorcycle loan. 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. 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 may have to pay a higher interest rate.

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 for other things like debt consolidation or home renovation as well.

You should still be able to take out a bike loan with bad credit but you will 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 worse credit means higher risk for lenders once you borrow money, and a higher likelihood that they won’t see a return on their money. For better interest rates, it might be worth repairing your credit score before putting in an application.

Picking your dream bike was the fun part! Now it’s time to choose the right loan to finance it. When it comes to finding the best motorcycle loan, you’ll mainly need to look at three main things:

Interest rate

The interest rate is possibly the first feature you’ll compare in a bike loan and can be either a fixed or variable interest rate. A fixed interest rate means your rate will not change for the life of the loan. You’ll know exactly what your repayments will be, while a variable interest rate can rise or fall along with the market and will often offer more flexible features.

Comparison rate

The comparison rate is a more ‘true’ representation of the cost of your loan than the initial advertised interest rate. This is because it factors in not only 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.

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 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 break fees or late payment fees. If you choose to use a car loan to purchase your motorbike, you may also encounter balloon payments, detailed here, which are a large lump sum payment at the end of a loan.

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. 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. 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 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!

Repayment features

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, a loan that allows for extra repayments allows you to make additional repayments, helping you save on interest as you’ll finish paying it off sooner. 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.  

Repayment options

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. This can be handy to line up your repayments with your pay schedule or an existing budget.

If you are planning to buy your car through a dealer, you are often able to use the finance option provided by the dealership. Before you take the offer out of convenience, 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 with our car loan comparison calculator.

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.

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 - 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.