With lending rates recently increased and more increases possible, buyers can compare new and used motorbike finance rates and conditions for their best option. Interest rates are key to the cost of loan repayments, the total loan payable and the overall acquisition cost of the machine. With the market rates increase with the recent decision by the Reserve Bank (RBA) buyers may be considering their options.
The outlook for future RBA decisions appears to trend towards further rate increases in coming months. This is based on Australia’s inflation rate and the situation in the Middle East has further added to the prospect of a rate rise.
Rates on consumer loans for motorcycles will still vary across the market and Jade continues to be well-placed to secure highly competitive rates with our extensive market coverage. But for buyers seeking their most affordable loan, opting for second-hand rather than new may be the solution. How do the numbers stack up? While the price of a second-hand machine will generally be less than a brand-new model, buyers requiring financing need to consider how the loans compare.
Compare New and Used Motorbike Finance Features
First, consider the type of loans required for second-hand and new motorcycles. These are Secured Motorcycle Loans and Unsecured Personal Loans. Secured loans are the preference for most buyers as they attract lower rates and potentially better terms and conditions than unsecured loans, with most buyers not required to provide extra collateral. But the machine needs to be accepted as loan collateral for a Secured Motorcycle Loan. New machines are generally readily accepted as loan collateral, as are quality, recent second-hand models in good condition.
The amount approved for a second-hand motorcycle loan as a percentage of the purchase price may be less than the amount approved for a new motorcycle. While the price may be less for second-hand, buyers may require a larger deposit than for a brand-new model.
Lenders will be considering the LVR – loan-to-value ratio. The value of a second-hand machine purchased from a dealer may actually be considered less than the price paid. Why? Lenders may assess the value as resale value which may be determined by wholesale not retail pricing. While this will be the process for both new and second-hand machines, the variations with second-hand machines may be greater than on new models.
The features of consumer lending products vary across the market. Lenders can have upper and lower limits for their specific loan products. We assist by selecting the lender from our large lender base with the criteria to match the buyer’s profile and loan requirements.
The terms may vary for latest model and second-hand motorcycle loans. Lenders consider the value of the machine at the end of a term when determining the loan conditions they will offer. A brand-new machine may be seen as retaining a higher value over a longer period. The age and condition of second-hand machines are considered by lenders.
A trade-in may be used to reduce the price and therefore the loan required on both new and second-hand. Riders may consider selling their current machine privately rather than trading in as often better prices can be realised through a private sale. Dealers will be offering a wholesale value as they will need to on-sell the machine and will be putting a mark-up on the price they pay to acquire it.
Compare New and Used Motorbike Finance Rates
Rates on loans for brand-new and second-hand motorcycles can vary, with better rates for newer machines. The best rates advertised by consumer credit lenders will be for new goods. Rates are different for secured and unsecured loans. Secured loans offer lower rates as the lender has the machine as collateral should the borrower default on the loan. Unsecured loans do not require collateral, hence the interest rate is higher.
Rates on secured loans are fixed so the rate and repayment will not change over the fixed term. Rates on unsecured loans are often variable. This means they may change with RBA and lender rate changes. With rate increases strongly tipped by the markets, an unsecured loan may result in higher repayments early in the repayment term.
Individual rate offers will depend on the size of the loan, the percentage of the loan compared with the value or price of the machine, and the buyer’s credit score and financials. Buyers can request a quick quote on both machines being considered for a rate to use in repayment comparisons.
With your individual rate quote, you can use our Finance Calculator to work up figures on different models to compare and make your buying decision. The calculator is also useful for varying loan amounts to see how repayments change to help with deciding on the deposit.
Compare Ownership Costs
While not related to the financing, buyers may also consider the additional costs and ongoing expenses of ownership. Consider the difference between registration and insurance on new vs second-hand, and the annual servicing and maintenance costs. While the second-hand model may have a lower price tag, the overall cost of ownership over a loan term may negate some of those savings.
For quotes to compare new and used motorbike finance, 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 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.
