At its May meeting, the RBA Board made its first of what is expected to be several increases in the official cash rate. The consequence of the RBA’s actions is a response by lenders to increase their borrowing rates across their individual loan markets. In short, interest rates on motorcycle loans can be in for increases across the board.
An increase in the interest rate on a loan typically results in a greater loan repayment amount. While Jade Bike Loans focuses on achieving the cheapest interest rates for our customers and hence the most suitable repayments, customers can assist in achieving the objective.
There are actions and decisions that motorbike buyers can take to minimise or offset the impact of interest rate rises on repayments on their motorcycle loans. These can include focusing on the repayment rather than the rate, understanding the motorbike loan lending market and varying elements of the loan to achieve the preferred repayment figure.
We’ll go through each of these options in more detail so new bike buyers seeking finance can better plan how they will approach their motorcycle loan.
Achieving Cheaper Motorcycle Loan Interest Rates
Before moving straight into the other elements of a bike loan, we first emphasise the significance of a lower interest rate on the ultimate objective of a cheaper bike loan. The interest rate is the key determining figure to the total cost of the loan and when calculated with the loan term and loan amount, that all-important loan repayment figure.
When planning the motorbike loan, there are a number of key issues that buyers should be across:-
- Lenders will typically advertise their lowest motorcycle loan interest rate which will be for loan applications that have a good credit score or rating. So maintaining a high credit rating is extremely important in receiving a bike loan offer priced at the lowest available interest rate.
- Motorcycle loan interest rates will differ for different banks and non-bank lenders. Covering enough lenders with quotes can be time-consuming and confusing for many. Using our broker-style services can cut straight to the chase in this regard. Jade Bike Loans is accredited with over 40 lenders and with our industry-level access, resources and bargaining power, our consultants are well-placed to achieve a quick and great outcome.
- Applications for loans are reported by lenders to credit reporting agencies for listing on credit profiles. Multiple loan applications can have a negative appearance on individual profiles and as such, impact the good work of covering all options that the applicant is trying to achieve. Using Jade avoids this situation.
- Beware of zero interest rate loan offers and other options which appear too good to be true. These types of loans can be hiding special conditions which can be costly if not identified. The special rate may only last for a short time and then a higher than market rate may apply. Hidden charges may also be lurking.
- Understand the difference between a variable interest rate loan and a fixed interest rate loan. We offer our Secured Motorcycle Loan at a fixed interest rate which will not change over the loan term despite changes in general interest rates. Variable rate loans are subject to change in line with lender rate rises following RBA cash rate increases.
Motorcycle Loan Term
Many loan applicants will have a figure in mind that they want or can afford in the monthly loan repayments. The repayment amount is often far more relevant and relatable than interest rates. Changes in the loan term change the repayment figure.
A shorter number of years/months will make repayments higher but less total interest payable and the motorbike will be owned outright sooner. But a longer loan term will deliver lower monthly bike loan repayments. The total interest payable will be higher and it will take longer to own the bike, but this may be an effective way to achieve the preferred repayment amount.
Lenders will have guidelines around the loan terms they will approve, so keep that in mind. But your Jade consultant will be working on your behalf to achieve the loan structure that you prefer.
To get an idea of how the loan term may change the bike loan repayments for the bike you are considering, head to our Motorbike Loan Calculator.
Total Loan Amount
The amount of the loan is going to be a major deciding factor in the determining the repayments. Requesting a smaller loan amount will result in smaller loan repayments. To achieve that end, buyers face a decision of whether to opt for a no deposit motorcycle loan or not. We do offer no deposit motorbike loans which allows for the purchase price of the bike and often additional accessories to be included in the loan. Very convenient for many buyers.
But if the main objective is to lower those repayments especially as rates rise, then lowering the loan amount by paying a deposit could be the more appealing option.
Outlook and Action
With the RBA highly likely to make further increases in the cash rate as soon as the Board’s 7 June meeting, the era of record low lending rates being enjoyed since November 2020 has ended. Now is the time for motorbike buyers to be smarter when seeking finance to ensure they achieve the lowest interest bike loan possible as well as meeting their preferred loan repayment goals.
For individually sourced and structured motorcycle finance contact Jade Bike Loans at 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.
