When considering finance to buy a motorcycle, buyers will typically focus on the interest rates offered by different lenders and on different loans. But there are many other aspects of taking on finance that buyers should be aware of and take into consideration. One aspect which may not receive as much attention as say rates and terms is what is required for collateral for motorbike loans.
While there are variations across the lending market with rates, finance limits and other loan features, there can also be variations in what individual lenders will accept as suitable security against the funds being loaned.
This may be important. If a buyer can’t meet individual lender loan collateral requirements, it may mean lowering the loan amount by paying a higher deposit, putting up other personal assets as loan security, paying cash for the machine, or having to forget proceeding with the purchase completely. Knowing the requirements for collateral for motorbike loans prior to applying for finance, may assist with motorcycle selection and with obtaining the most suitable loan.
What is collateral for motorbike loans?
Loan collateral is the goods provided as security against funds borrowed. Collateral, or security, is typically provided by the goods being financed for secured credit products. Where a lender does not accept the goods as the sole form of security, applicants may be required to provide other personal assets as security. These other assets may include real estate property or other assets such as boats, cars and similar.
Lenders will register their interest in goods used as collateral under finance with the Personal Property Security Register (PPSR). When the finance is finalised, the security interest is released by the lender.
The lender’s interest in, and acceptance of, goods used as collateral finance provides them with the right to repossess the goods if the borrower defaults on the loan. With goods secured as collateral against finance, lenders have greater confidence of recouping the funds extended. Hence, secured finance offers better rates than unsecured credit products.
How Lenders Approve Loan Collateral
While consumer loans are regulated through ASIC regarding guidelines for approving loans, collateral requirements may vary across the market. When an application for secured finance is received, lenders assess both the credit profile and financials of the applicant and the suitability of the goods being financed as security.
Lenders assess the value of the goods being purchased against the loan amount requested. The loan to value ratio. When interest is added to the original loan amount, the total payable on the motorbike increases.
Lenders will be considering the age and condition of the machine, and the projected resale value should they need to repossess and sell the machine to recoup funds. Lender decisions re acceptance of a machine as security can impact no deposit finance approvals and loan limits.
The credit profile of the applicant always plays an important role in getting approved for motorcycle finance. A good profile is considered a good risk and may contribute to more agreeable collateral requirements being approved.
With collateral held as security for a loan, lenders can have greater confidence and be more amenable to approving more competitive rates and higher borrowing limits. A higher limit may allow a buyer to get approved for no deposit finance – borrowing the full purchase price of the motorcycle. Where collateral is not considered suitable as sole security, a lower loan amount may be set. This may mean buyers have to pay a deposit.
Collateral Requirements for New Motorbike Loans
Secured Motorcycle Finance will be the loan of choice for most buyers of new motorcycles. New machines are typically accepted as suitable collateral for a loan. Whether or not the machine can be used as the only collateral, will depend on the lender’s assessment of the application.
Used Bike Finance Collateral Options
Second-hand machines will need to be approved by lenders for secured finance. The age and condition and value are considered. Many good quality, recent model machines are accepted as collateral for secured finance by many lenders.
Where a machine is not accepted as suitable collateral, buyers can consider taking on an Unsecured Personal Loans. This type of credit does not require collateral but does attract a higher interest rate than secured format finance.
Buyers considering second-hand machines may use our Motorcycle Finance Calculator to compare estimated repayments on secured and unsecured loan options to assist with purchase decisions.
Using a Broker to Handle Motorbike Loan Collateral Approval
Jade Bike Loans assists buyers by sourcing the most suitable lender and credit product including addressing the collateral for motorbike loans requirements. We provide a comprehensive service to select the most suitable lender, from across our 80+ lender panel, to match both the buyer and the machine.
We handle each application individually, with our brokers personally negotiating with our lenders on achieving the best rates, terms and loan limits, with collateral requirements a key consideration. Saving buyers time in sourcing the most suitable motorcycle finance and ensuring they receive the solution that best meets their requirements.
For expert assistance and services regarding approval of collateral for motorbike loans, contact Jade Bike Loans on 1300 000 003 or online.
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.
