When you’re in the market for a new motorcycle and you need finance for the purchase, there can be many questions to be answered, especially around the financing. One major query that many buyers may have is how much they are going to need as a deposit on a motorbike loan. Particularly in the current economic environment, many buyers may not be keen to part with too much of any nest egg they may have managed to save. Preferring to keep that for other purposes.
The good news is that unlike say home loans, there is no specific minimum deposit requirements for consumer credit. In fact, some buyers can be approved for no deposit loans. The less-good news, the amount required is dependent on the borrowing power or credit limit as decided by lenders when assessing the application.
The lender determines how much a loan applicant is allowed to borrow – their credit limit, and the buyer then needs to consider this in relation to the price of the motorcycle being financed. The difference between the credit limit and the price of the machine, may determine the downpayment required. Reducing the amount needed to buy the machine in line with the loan approval limit.
Apart from lender approval criteria, there are a number of other factors that buyers can put into the mix when deciding on their motorcycle downpayment. Understanding the implications of down payments and utilising available tools and expertise, may be beneficial. Jade Bike Loans assists buyers with deposit on a motorbike loan decisions with resources to compare options and services to source the most suitable finance.
How Borrowing Power Relates to Deposit on a Motorbike Loan
Lenders don’t specifically request loan applicants to make downpayments when applying for finance. But they do determine the maximum amount that they are willing to lend to an individual applicant for a certain purchase amount – their credit limit. This maximum or borrowing power, may then require the buyer to have to make a downpayment in cash to the dealer to secure financing for the balance. Alternatively, they can look at buying a machine at a lower price, within their approved credit limit.
To highlight how credit limits or borrowing power affect downpayments, consider this example. A buyer applies for a loan on a Suzuki GSX-S1000, currently on sale with ride away price of $17,590. A lender approves the application with a loan limit of $14,000, leaving the buyer with a downpayment of nearly $3,600.
Another buyer may be applying for financing on a Harley-Davidson Road Glide with purchase price around $47,000 and be approved for no deposit finance – no down payment required. Both loan applications are for a Secured Motorcycle Loan with the machine used as the collateral for the finance – why the big difference in the amount of the deposit?
Lenders assess each application, looking at the income and outgoings, assets, and especially the credit profile in determining the individual’s approved borrowing power. In this example, the Harley buyer is approved for a higher credit limit than the Suzuki buyer. Allowing the Harley buyer to borrow 100% of the machine’s purchase price.
While variations in finance approval criteria, loan types and loan limits vary across the lender market, all Credit Providers must adhere to the Consumer Credit Guidelines as set by ASIC.
How a Deposit Impacts the Motorbike Loan
We can secure no deposit financing for some buyers, subject to lender approval. But before making this request, buyers may consider their options.
Making a downpayment on a motorcycle purchase and applying for finance for less than the full purchase price, can impact any loan offer in a number of ways. The monthly repayments will be less where a lower amount is borrowed.
The lesser amount requested, in relation to the value or full price the machine, may result in a better interest rate being offered. The lender considering the lower loan amount request as a lower risk. A larger downpayment may allow a buyer to take on finance over a shorter repayment time and own their machine outright sooner. The ownership cycle can be significant if the plan is to upgrade to a new machine within the loan term period.
Comparing Options for a Deposit on a Motorbike Loan
To quickly compare downpayment outcomes on motorcycle finance to make decisions, buyers can use our handy Motorcycle Finance Calculator. Estimated monthly payments on different loan amounts can be obtained by simply changing the total loan amount entered. Deduct the amount of the downpayment from the loan total, enter that value and leave the interest rate and term the same. This tool is also useful for comparing models based on estimated finance repayments.
Expert Services to Secure Motorbike Loan with Suitable Deposit
Securing motorcycle financing with the preferred deposit or with no deposit, may come down to the choice of lender. With our access to an extensive lender base, we have the resources to match each buyer with the most suitable lender. Ensuring the best possible financing option – rates, terms and loan amount, is achieved.
To discuss the requirements for a deposit on a motorbike loan based on your specific profile and purchase, speak with one of our experts at 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 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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