When seeking a loan to purchase a new motorbike, buyers have a number of important factors to consider. Key to the overall outcome is the decision around the length of the loan. This decision can impact the repayments and the overall cost of the loan. As specialist motorcycle lenders, Jade Bike Loans details the implications of a short or long term motorbike loan to assist buyers arrive at the best structure for their loan.
While there is a focus on interest rates in regard to consumer finance, the loan term should not be overlooked in the overall assessment of the motorbike loan. Specifically, the relationship between the interest rate, the total amount of the loan and the term of the loan. These work together to determine the monthly bike loan repayments which can be key to the affordability of the purchase.
Considerations
We offer motorcycle loan terms up to 7 years/84 months. So for the purpose of this analysis, we’ll take 7 as a long term bike loan and say 3years/36 months as a shorter term and or 4 years/48 months as an average term to provide perspective for the issues to be discussed.
- In basic terms, the longer the bike loan term the smaller the monthly loan repayments and the shorter the motorcycle loan term the bigger the monthly payments.
- We arrange Secured Bike Loans with fixed repayments. So once the term and the repayments are agreed to, they remain in place over the duration of the years of the term.
- The loan repayments need to work with the borrower’s budget now and over the full term of the loan. Looking ahead to expected income levels forms part of a personal assessment of loan requirements.
- A shorter loan term will mean you will own the bike sooner. When taking out a Secured Bike Loan, the borrower does take ownership and is responsible for the ongoing costs from day one. But the lender holds a claim over the bike as it is used as security against the loan. This security is registered by the lender on the PPSR. When all payments are finalised, this security is released.
- Additional payments can be made with a Secured Bike Loan if a wage rise is received or additional monies come your way. Note that by making these extra payments on top of the scheduled payments, it will mean the loan will be finalised sooner and effectively shortens the loan term. Break fees would apply when a loan term is ended early. These are minimal and will be outlined by your Jade consultant when the loan quote is presented.
- Lenders will have a say in the loan term that they will approve. Some will have a minimum and some a maximum. Most lenders will take into account an assessment of the individual loan application.
- The projected value of the machine at the end of the loan term is a serious consideration. Most buyers would be looking to have the amount due on a loan in line with the value of the asset.
- Upgrading timeframe – is this bike a keeper? If you are the type of rider that likes to regularly upgrade to the newer machine, then that can come into the equation when talking loan terms. If looking to sell or trade up before the end of the loan term that is known as selling a bike ‘under finance’. The same outcomes as mentioned above about ending a loan term early would apply. Most would be seeking a situation where the resale price is equal to or exceeds any payout figure on the loan.
- Terms can’t easily be changed once an agreement has been reached with the loan. So paying attention to all these details upfront is important.
Worth Remembering!
Current low interest rates on consumer finance in general can result in lower repayment levels than at other times when higher rates were offered. This allows buyers to opt for a shorter loan term and pay off the bike sooner while maintaining a workable repayment level.
Alternatively, opt for a longer loan term and enjoy an even lower monthly loan payment, knowing the opportunity is always there to make extra loan payments.
Interest rates on our motorbike loans are fixed so the rate and the repayments remain the same for the full loan term.
Most importantly, you won’t be alone in working through all the implications and machinations when you choose to engage Jade as your lender. Your Jade consultant will be assisting you with the entire loan process and raising issues for you to make your own personal decisions around.
Calculating Your Ideal Motorcycle Loan Term
The achieve the ideal loan term, the best interest rates and loan conditions means submitting quality loan applications. The lender’s assessment of the personal credit report is critical in the loan application approval process. Maintaining a good credit profile and score can improve the prospects of being approved for preferred loan terms and conditions.
To start working out how you may like your loan structure for your upcoming purchase, use our Bike Loan Calculator. By keeping the loan amount and interest rate steady but changing the number of years of the loan term, you can see how the repayment estimates change. When using this resource, be aware that it doesn’t have a memory. Noting down the calculation results can be helpful.
For a motorbike loan sourced and negotiated to meet personal term requirements, contact Jade Bike Loans on 1300 000 003
DISCLAIMER: IN REGARD TO ANY ERRORS OR MISREPRESENTATIONS IN THIS MATERIAL, NO LIABILITY IS ACCEPTED. THE DETAILS, CONTENT AND DATA ARE 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.
