Published in July 28, 2021
Whether you’re a first-time rider or an experienced biker, buying a new motorbike is a big decision. Finding an affordable motorbike for sale isn’t difficult, however, if you’ve decided on a pricier bike, you’re probably wondering if a motorbike loan is a good idea.
Motorbike loans tend to be trickier than car loans. Many financial institutions offer loans on new or used cars, however, that’s not always true with motorbikes. Some banks or credit unions may have restrictions on the type of motorcycle they’ll finance or offer different types of loans for bikes.
Another option to consider is financing through a motorcycle dealership. Apart from motorbike loans, you can consider borrowing an unsecured personal loan. It’s important to note that unsecured personal loans tend to have higher interest rates, making it a costly option.
You should compare motorcycle loans just like you would treat car loans. It’s best to always shop around and compare different loan rates to find a deal that suits your needs.
The process of getting a motorbike loan from a bank or credit union is similar to the process of getting a car loan. You apply for a loan, get approved, sign an agreement, and then pay your debt in increments.
Apart from having affordable monthly repayments, there are other budget rival factors to consider when taking out a loan. It’s crucial to consider factors such as the loan term, as well as any interest rates.
Although longer terms mean lower monthly payments, interest accumulates over long periods. Therefore, you might find that long term loans can cost you more than shorter ones.
Borrowers with low credit scores may not get similar rates as people with better credit scores. That’s why it’s best to improve your credit score before applying to loans.
Just like cars, you can usually finance your motorbike from the dealership you purchased it from. Financing through a dealer is convenient as you’d be getting your vehicle and your loan from one place.
However, when financing through a dealer, you may miss out on loan benefits from other providers, so it’s best to compare different rates and lenders before applying to one. Financing through dealerships may be costly, as they tend to have higher interest rates than banks and credit unions, and may also charge additional fees due to them acting as the middleman.
Motorbike loans are essentially secured loans, meaning your motorbike acts as collateral and can be seized if you can’t make your payments. If a motorbike loan doesn’t suit your needs, you might consider borrowing an unsecured personal loan.
With unsecured personal loans, your property isn’t considered collateral. You agree to borrow a certain amount from the lender, and pay it back over a certain period, plus interest. However, if you don’t pay back your loan, you could face wage garnishment, meaning the loan can come out6 of your paycheck.
Personal loans tend to be more costly than secured loans, as the interest rate is higher, and you may have prepayment penalties throughout the life of your loan. It’s always best to consider the interest rate on your chosen loan, as those fees accumulate and end up being less cost-effective.
Borrowing a loan is a big commitment. If you’re a new rider and plan on financing your motorbike, it’s best to consider other options in case you realise you don’t enjoy riding and are already committed to a loan.
The worst thing that could happen is making payments on a bike you don’t use, and even worse, making payments on a vehicle that lost its market value.
As mentioned previously, finding an affordable motorbike isn’t difficult, and is a good option if you’re a new rider. The best option to consider is saving up to buy your preferred bike in cash rather than taking out a loan.
Owning any sort of vehicle is pricey, as there are payments you’d constantly need to make such as insurance, registration and services. Some types of coverages motorbike policies might include are:
You’ll most likely be required to have comprehensive and collision coverage when financing your motorbike.
Like what you’re reading? We’ve got plenty of more interesting content. Found about more about car insurance brokers
While we at Tippla will always do our best to provide you with the information you need to financially thrive, it’s important to note that we’re not debt counsellors, nor do we provide financial advice. Be sure to speak to your financial services professional before making any decisions.
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