How long it takes to pay off a bike loan depends on the financing term. That is, the number of years/months of monthly repayments. While many buyers requiring finance will focus solely on the interest rate, the term also deserves serious consideration. If the timing isn’t right on a motorbike engine, the performance and efficiency will be compromised. The same principle can be applied to financing a machine. If the motorbike loan terms are not right, the financing overall, may not best suit the buyer and may not work to achieve their objectives.
Buyers can consider the pros and cons of paying off a motorcycle loan quickly or over a longer timeframe, before submitting their application or requesting a quote. There can be benefits in paying off a loan quickly and spreading repayments over a longer period. Which is the better option can depend on numerous factors including the individual’s financial circumstances.
The loan term will need to be approved by lenders. But buyers can be prepared with their preferences by planning their loan ahead of buying and applying. We present a range of issues for consideration to assist buyers to set their preferences prior to applying for motorcycle finance. Having these preferences established, may expedite the loan application approval process and delivery of the new machine. So, start deliberating and planning your preferred motorbike loan terms.
Impact of Motorbike Loan Terms
The term of the finance agreement is the number of years, often expressed in months, that a borrower has to repay the loan. This timeframe, in conjunction with the loan amount, determines the monthly repayment. The shorter the term, the lesser number of monthly repayments involved, but the higher the amount of each repayment. The longer the term means more monthly repayments but each monthly payment is lower than for a shorter term.
When financing is taken over a longer timeframe, a larger total interest can be accrued. This adds to the total cost of the financing and to the machine’s total acquisition cost.
Upsides and Downsides of Different Motorbike Loan Terms
The preferred term can very much depend on the loan amount which can come back to the price of the machine. Buyers of higher priced models may seek longer financing terms to make the purchase more affordable.
Buyers particularly need to consider the financing term in relation to the impact of the repayments on their weekly/monthly budget. Will opting for a shorter term to pay off the loan faster with a higher monthly repayment put stress on personal finances?
An advantage of a shorter term, paying off the loan faster, is that the buyer will own the machine sooner. Owning the machine outright providing them with an asset, improving the personal balance sheet position and potentially improving the credit score. Providing a better scenario for future loan applications.
Opting for a longer term with smaller repayments, may provide for lower, more manageable monthly commitments. Leaving funds in the budget for other purposes. But the longer term will result in more total interest payable.
The good news is that Secured Motorbike Loans do allow for additional payments to be made with minimal payout fees applicable. That may provide buyers with a ‘middle ground’ solution. Request a mid-range term and make additional payments by choice, when funds are available.
Interest rates and terms are fixed on secured format loans. The rate and repayments won’t change, whether a short or a longer term is secured and regardless of RBA cash rate decisions.
A consideration for buyers that plan to upgrade their machine part-way through the term, can be the value of the machine at key points in the financing term. For a positive trade-in or resale, most buyers will not want to owe more on the loan than can be recouped with the trade-in or sale.
Lender Variations with Finance Terms
As mentioned above, lenders must approve the term of the financing. They will be assessing the applicant’s credit profile, the loan amount and borrowing limit, and with second-hand machines, the condition and value of the motorcycle.
All lenders must adhere to ASIC requirements with consumer credit. These include not offering a loan to an individual which is deemed unsuitable. Lenders will be looking to make an offer with repayments within the applicant’s affordability zone based on current income.
Paying Off Finance with Your Preferred Motorbike Loan Terms
Buyers can use a Finance Calculator to work up estimated repayments based on different terms. The period over which buyers would prefer to pay off their machine. Terms of up to 7 years may be achieved, with most buyers looking to a term of 4-5 years.
To get approved for preferred motorbike loan terms, riders can use Jade Bike Loans to select the most suitable lender and handle negotiations with lenders. Our experts handle sourcing the most suitable quote and processing the application to best achieve our customer’s preferences.
To pay off finance with motorbike loan terms that meet your requirements, use the services of Jade Bike Loans on 1300 000 003 to handle your loan.
DISCLAIMER: IN REGARD TO ANY ERRORS OR MISREPRESENTATIONS IN THIS MATERIAL, NO LIABILITY IS ACCEPTED. THE DETAILS, CONTENT AND DATA IS PRESENTED PURELY FOR GENERAL INFORMATIONAL PURPOSES FOR MOTORBIKE BUYERS AND THOSE SEEKING MOTORCYCLE LOANS. THIS IS NOT INTENDED AS THE SOLE SOURCE OF INFORMATION FOR FINANCIAL DECISIONS. IF SPECIFIC ADVICE IS REQUIRED AROUND FINANCIAL DECISIONS, READERS SHOULD SEEK THEIR OWN FINANCIAL ADVISOR.
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