There’s been an increasing trend in the number of bike loan applications each year and this doesn’t really surprise us. Motorbikes are not only a great alternative to cars as a means of daily transportation, but they also give a different kind of thrill that many of us enjoy while adding a level of excitement to road trips and scenic rides.
Getting a motorbike loan is not that different to the process of getting a car loan. But in order to get the best deal according to your financial capabilities and the type of motorbike owner you are, you’ll need to consider some important factors in a motorbike loan.
1. Which motorbike can you afford?
The first thing that you should consider is your budget. Before shopping around for different makes of a motorbike, sit down and analyse your finances including your monthly income, your assets and savings, and current debts. All of these will be assessed by the lenders and will contribute to the approval of your loan. If possible, try getting a pre-approval so you have an idea of how much buying power you have.
After that, you can search for a motorbike within your price range. Look for different options including used motorbikes or a private sale. If you are new to motorbikes, you might consider purchasing a more basic or cheaper one even if you can afford a high-end brand.
2. How good is your credit score?
Your credit score tells lenders how good you are at paying back previous loans. Having poor credit means that lenders will have a higher risk in lending to you, which will result in either loan rejection or a higher interest rate. So make sure that you have a good credit score and clean credit history before submitting a loan application. Settle any unpaid loans or credit card debts.
3. What is the best available finance option?
Don’t settle for a motorbike loan product unless you have shopped around and looked at all possible choices. Do your research and find the loan option that suits your financial profile and motorbike needs.
Important details like interest rates, loan terms, repayment methods, insurance and loan type (secured or unsecured) are just some of the things that you need to know. Brokers like Aussie Bike Loans can do the hard yards for you as we have access to a wide range of lenders and can, therefore, find the best deal and rate for you.
4. Where can you find your best option?
The ideal loan that you should look for is secured and specific to motorbikes. This type of loan is taken against an asset (it can be the motorbike) as the collateral and has lower interest rates. Not all loan sources have this type of motorbike financing. Some banks and credit unions don’t have loans specific to motorcycles so they offer unsecured personal loans instead.
Make sure to go around to multiple lenders, dealerships, manufacturers, banks, credit unions, and other finance companies in order to choose the best option.
5. What are some things you shouldn’t do?
With all the excitement of buying a new motorbike, some people tend to make hasty decisions that sometimes aren’t financially sound. One might use a credit card as the payment method. This is a big “No-No” despite its convenience. Credit card interest rates and penalties will cost you more in the long run.
You should also avoid getting a longer loan term. Motorbikes depreciate just like cars do. After a few years, you will be paying for more than the worth of your motorbike. So, it’s better to make larger repayments in a shorter amount of time. Another thing that you shouldn’t do is combine the motorbike loan with your home loan. Home loan terms are usually 10-20 years, which means you will be paying the motorbike interest rate for the same number of years.
Lastly, avoid going to lenders that advertise easy loan approval or low upfront fees, but have very high-interest rates. Go to a lender that has years of experience in providing quality loans like Aussie Bike Loans.
You can apply online or call our team for some more information about how we can get you on the road on two wheels.