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Financing a motorcycle in Australia
If you’re looking for finance for a motorcycle in Australia, you have two main options.
- A secured personal loan (similar to a car loan)
These options are similar in some ways. In fact, they’re often advertised by lenders interchangeably.
But trust me, when it comes to cost, they are very different. This is important. In fact, analysis by Money shows that on the average new motorbike loan ($18,267) a 1% difference in interest rate would mean paying an extra $520 in interest over a five-year loan.
How to compare motorcycle loans and rates
When you’re comparing motorcycle loans, you’ll often be looking for the best, or lowest, rate. Currently the lowest motorcycle loan rates start from around 6-7% p.a.
But remember, the interest rate you’re charged will depend on your risk profile.
Lenders will consider your credit score, income, employment situation, living situation and other factors.
Our motorcycle loan rates comparison table below shows just how much of a difference the interest rate can make on your weekly repayments. For exactly the same motorcycle.
This can add up to thousands of dollars over the life of the loan.
Which type of motorcycle finance is best?
Unless the bike you’re buying is particularly old or unusual, there’s a good chance it will be eligible to be financed with a secured motorcycle loan.
As an example, among borrowers looking for secured finance for a used motorcycle through Money.com.au, the average age of the bike is 7.1 years.
Secured motorbike finance is usually the cheaper type of personal loan. Sometimes it's a lot cheaper. Here's how it works.
Secured vs unsecured motorcycle loans
Secured motorcycle loans
- The bike you buy is used to secure the loan (known as collateral)
- This lowers risk for the lender so they charge less in interest
- You may have the option of a longer term
- And a larger amount
- Just remember, if you can’t repay your loan, the lender can repossess the bike
Unsecured motorcycle loans
- With an unsecured personal loan you don’t need to use the bike as collateral
- The interest rate is usually higher
- You might be limited to a shorter loan term
- And a lower loan amount
- But you’re not limited to using the loan to pay for the bike itself
How do motorcycle loans work?
Loan amounts up to $100,000
Terms from 1-7 years (our data shows a five-year term is most common)
Finance a new or used bike
Variable or fixed interest rates available
Weekly, fortnightly or monthly repayments
No deposit required
Interest rate is tailored to your situation
Steps to getting your motorcycle finance
1
Work out how much you can afford to borrow
2
Compare motorcycle loans
3
Apply for pre-approval with the lender
4
Find a motorcycle to buy based on your pre-approved amount
5
Finalise your loan approval (let the lender know what bike you're buying and provide any additional information requested)
What else should you look for in a motorcycle loan?
The interest rate on motorcycle finance is important. BUT it’s not the only factor you should pay attention to.
Here’s what else I’d recommend comparing:
Motorcycle finance fees
Upfront fees can be very high on some loans (over $1,000 in some cases) and some lenders charge ongoing fees too (annual or monthly). But you should be able to find options with low fees.
Comparison rate
This gives you a better idea of the true cost of your motorcycle finance. It includes the interest rate plus most fees. Ideally the interest rate and comparison rate should be similar. Or the same ideally.
Loan term
This is how long you’re borrowing the money for. If you go with a longer term, you’ll have lower repayments. But the overall cost in interest will be higher. You can combine the loan term with the interest rate and fees to calculate the total cost of your personal loan.
Extra repayments possible?
If the loan allows you to make extra repayments, this can help you save money. Just watch out for fees that may apply for doing this on some loans.
Am I eligible for a motorcycle loan?
Every lender has different eligibility criteria for motorcycle loans.
But the most basic qualifying criteria mean you must be:
- 18 years of age or older
- An Australian citizen or permanent resident
- Employed, with a regular source of income that you can demonstrate
If you meet the basic eligibility for a motorcycle loan, the lender will assess your application based on your financial situation and credit history.
What documents do I need to supply to the lender?
To get motorcycle finance, you'll typically need to provide:
- Proof of identity i.e. passport or driver licence
- Proof of income i.e. payslips or tax returns
- Proof of any assets you own
- Statements for any other loans or credit cards
- Details of regular expenses i.e. bank statements
If you’re using a motorcycle as security you’ll also need to provide details about the vehicle including its age and the type of bike it is.
If you’re self-employed (i.e. no payslips) there’s a different loan type called a low doc personal loan you can apply for.
How does my credit score affect my motorcycle finance?
When deciding whether to approve your application, the lender will do a credit check.
Borrowers with an extensive and blemish-free credit history will be eligible for the cheapest motorcycle loans.
But most lenders will approve borrowers who have a good credit score.
Borrowers with lower credit scores may need to consider a specialist bad credit personal loan provider.
These lenders generally charge higher rates.
I recommend checking your credit score for free before you apply for motorcycle finance so you know where you stand.
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