Motorbike loan interest rates on Personal Secured Finance are set by individual lenders, with changes typically made in line with Reserve Bank rate decisions. At its 29 May meeting, the Board of the Reserve Bank (RBA) cut the cash rate by 0.25 basis points. Their next Monetary Policy meeting and decision is coming up on 8 July. The financial markets are strongly tipping that we will see another rate cut.
For riders in the process of planning a new machine purchase with finance, that July decision could have an effect on their finance if applying after any rate change announcement. While the RBA does not set the interest rate charged by individual lenders, its decisions do have an impact across all lending markets. The RBA Monetary Policy Board makes decisions on the cash rate which is the overnight borrowing rate for banks, not the rate that individual borrowers are offered on different forms of finance.
The cash rate does however, essentially set the benchmark foundation from which lenders set their specific rates on their finance product portfolio. What could the effect of any July rate cut on your loan? We explain.
How Motorbike Loan Interest Rates are Set
Consumer credit interest rates are set by banks, finance companies and other lenders individually. Each will set their advertised rate for their different loan products based on the cash rate, their own funding and other costs, and often taking into account the forecasts of their analysts. That is why there are variations across the consumer credit market on loans for motorcycles and other goods.
The lender advertised rate will be for loans on new goods for borrowers that have a good credit rating. Second-hand goods can attract a different rate than new. Borrowers with a less than good credit rating will be offered a different rate.
Rates are offered to individual borrowers by lenders, based on the lender’s risk assessment of the application. They will be reviewing the financial position of the borrower, their income and expenses, their credit profile and the amount of the loan relative to the value of the motorcycle.
While all lenders in the consumer credit market must adhere to the Consumer Credit Laws and Regulations as established by ASIC, individual approval criteria does vary across the sector. This is why a rate offer from one lender can be different from a rate offer from another lender. A key reason why having access to a large lender selection through Jade can be highly beneficial in securing the best motorbike loan interest rates.
RBA Decision Effects for Motorbike Loan Interest Rates
If you currently have a Secured Motorbike Loan with a fixed interest rate, any RBA decision to change the cash rate will not affect your loan. A fixed interest rate means the rate is fixed and unchanged from the time the loan is arranged to the time it is finalised.
RBA decisions will, however, typically lead to lenders changing their advertised rates on their finance products. In the home loan market, banks often change their rates the day after an RBA decision. In the consumer credit market, rate changes are also usually made following these decisions. Whether it is for the full amount of the RBA cut, say the full 0.25%, or less, is up to individual lenders. Consumer credit is a highly competitive sector in the lending market. Lenders will want to remain competitive with attractive rates to attract borrowers.
Buyers planning to take on finance for a new machine can work up estimates on what a rate change may mean for their loan, using our Finance Calculator. Start by working up repayment estimates using our current advertised interest rate as a guide, and the loan amount you anticipate you may need to buy your machine.
Note that result and then carry out another calculation with an interest rate that is say 0.25% less than our current rate. Note the difference in the monthly repayments. While the monthly difference in securing a lower rate may seem relatively small, when this is factored over the full term of the loan, it can be a significant savings. Highlighting the importance of always securing your best rate offer, regardless of the current rate market.
Securing the Best Motorbike Loan Interest Rates
While the market waits for the 8 July decision and any ensuing consumer loan rate changes, buyers can consider a few issues which may deliver them a better rate offer. Your credit rating is very important to a loan offer and getting approved. Credit profiles are built up over time, so it is important to stay on top of paying bills on time and meeting other loan commitments.
In the short-term, you may consider paying off any other loans and reducing any high credit card balances. Having a better personal balance sheet may be seen as a positive by lenders.
Also consider the amount you intend to request for your loan. The lower the loan relative to the value of the machine, can be seen positively by lenders. Consider how much deposit you can afford to reduce the loan required.
To secure your best motorcycle loan interest rates, contact Jade Bike Loans on 1300 000 003 for your finance sourced from a large lender base.
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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