Motorcycle Hire Purchase Agreements Explained

Do you dream of owning that stylish motorcycle that you know you’ll love but are short of funds? Whether your motorcycle purchase is for personal use or business purposes, the Hire Purchase (HP) Motorcycle Finance can make your dreams come true.

How does hire purchase work?

Motorcycle hire purchase, or Term Purchase as some may call it, is a secured financing loan for motorcycles. Under this agreement, a lender (a bank or a finance company) will pay the dealership for you to have the motorcycle. You just have to pay a minimum deposit and the remaining amount will be covered by the lender with the hire purchase loan.

The loaned amount is set to be paid in monthly amortisations in different finance terms with specified fixed interest. Finance terms range from a year to 4 years, or more depending on the agreement between you and the dealer. During the loan term, you can use the motorcycle as the registered keeper, but the legal ownership belongs to the lender.

After paying all fees within the finance term, the motorcycle ownership will automatically be transferred to you. If agreed payments are not made for whatever reasons, the lender has the right to retain possession of the motorcycle to recover the remaining amount you owed them. On the other hand, early settlement of the payment at any time may benefit you, since payment for the interest due over the full-term is no longer required.

Still confused? Read our helpful article on ‘How Motorcycle Loans Work‘.

When does it suit?

Motorcycle hire purchase loan is most suitable for acquiring assets that will be used for business expansion and upgrade purposes. Although, it is also applicable to full-time employees, part-timers, and self-employed individuals who want to acquire more expensive motorcycles that they can’t buy outright.

Pros and Cons

Just like any other product or service offered, a motorcycle hire purchase agreement has its advantages and disadvantages. Read them through and decide for yourself if it is the right option for you when acquiring a motorcycle.

Pros

  • You can buy a motorcycle with all the new specs you want in no time with a minimum cash deposit.
  • Quick and easy approval from vehicle dealers.
  • Loan terms are regulated by law which provides rights and protections.
  • Payment terms are made in a longer period through a fixed monthly installment of your choice.
  • Payments are not affected by changing bank interest rates.
  • VAT (Value Added Tax) is excluded in monthly payments.
  • Lower interest rates mean lower payments.
  • Rebates may be enjoyed for early payments.
  • You own the vehicle after the final payment is made.

Cons

  • Risk of vehicle repossession is possible when payments are not paid in time.
  • You are only the registered keeper and the lending company legally owns it until the final payment is made.
  • As the keeper, you are responsible for the insurance and maintenance of the asset.
  • It will be more expensive than a cash purchase cost.
  • GST is charged on upfront fees including the term charges.

What you need to know

Motorcycle hire purchase agreements are fast and easy, that’s why it is very appealing to buyers. Just remember that this motorcycle loan is dependent on individual conditions.  If you want to have the best hire purchase agreement for your motorcycle acquisition, here are important factors you need to be knowledgeable about:

1. Interest rate – The interest rate will contribute to the total amount you need to repay. The bigger the interest rate, the bigger the amount you will repay over the loan term.

2. Fixed and variable rates – Make sure that the loan rate is fixed so that the monthly repayments are also fixed. If it’s a variable rate, your repayments might increase if bank interest rates also increase.

3. Hidden fees/charges – Make sure to ask for all the fees included in your motorcycle hire purchase agreement. Common fees include establishment fees, service fees, and the account keeping or loan service fees. These fees are associated with your loan terms so make sure they are also inclusive in your repayment scheme.

4. Loan term – You must select a loan term depending on your capacity to keep up with the repayments. Shorter terms mean higher monthly repayments and longer terms mean lower repayments. Just keep in mind that longer terms will also incur you higher interest charges.

 5. Deposit – A deposit reduces the loan amount, thus, reducing the total payable amount and the monthly repayments. A higher deposit means a lower loan amount and lower repayments.

6. Total amount payable – Do note about the total amount of your loan including the amount of interest charged and fees for the whole loan term.

7. Payment frequency – Though most lenders offer a monthly repayment schedule, you can also do it weekly or fortnightly. You may opt for a payment frequency depending on your capacity or budget.

8. Extra payments and early termination – Ask if your motorcycle hire purchase agreement allows additional repayments and early termination. This is important if you plan to pay off your loan sooner to reduce interest and the total amount payable. Make sure that it’s allowed because some lending companies charge fees in doing so.

9. Balloon payments – Balloon payments, also known as residual payments, can be applied to a loan. They will significantly lower your monthly repayments but require you to pay a large sum at the end of the loan term.

10. Credit history – Your personal or business credit history profile is reviewed and analysed upon applying for a motorcycle hire purchase loan. The better profile you have, the lower the interest rate you will be given.

If you want to secure the best hire purchase package you want for motorcycle ownership just make sure you go over the terms and conditions of the loan terms and ensure that you are able to pay your commitments.

Here is a guide on ‘How to Get a Motorcycle Loan‘.

Hire Purchase Loan with Aussie Bike Loans

Buying the motorcycle you need for yourself or your business doesn’t need to take ages. With a motorcycle hire purchase loan, you can do it easily and conveniently with the help of Aussie Bike Loans.

For over 30 years, Aussie Bike Loans has provided different motorcycle finance solutions with flexible interest rates. Whether you are looking for a new or used motorcycle, we can give the best deal on bike loans that suit your financial profile.

Learn more about our flexible business loan options here.

Call us today on 1300 769 999 or apply online and get a loan pre-approval for your dream motorcycle today.

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