Motorbike finance interest rates may increase from some lenders with the RBA cash rate rise but buyers can seek help from a broker to find their best offer. The Reserve Bank (RBA) decides on what is known as Australia’s cash rate. This is the rate of interest that banks and other lenders are charge on overnight borrowings. The cash rate is not the rate of interest on consumer and other types of loans.
Banks and non-bank lenders are not required by law or other regulation to change their lending rates in line with RBA cash rate decisions. Lenders set their rates based on their own analysis of the market, interest in lending to a certain sector, and their funding costs. Changes to motorbike finance rates will vary across the lending market following a decision by the RBA. The rate offered on loan products and to individual buyers will vary across the market.
Buyers looking to secure a good rate on a motorcycle loan may face the prospect of having to contact multiple lenders. To make that process faster and not impact their credit score, buyers can use a finance broker to find their most suitable and cheapest motorbike loan offer.
We provide this explainer to assist buyers understand the current rate market, how RBA decisions impact motorcycle loans and the ways buyers can still get a good loan rate.
RBA Decisions and Motorbike Finance Interest Rates
At its 3 February meeting, the Monetary Policy Board of the RBA announced it was raising the official cash rate by 0.25% to 3.85%.
When the Reserve Bank announces a cash rate rise, it can create confusion for buyers seeking loans in many markets, including for a new motorcycle. This may have been intensified with the February decision as it was only in August last year that the RBA actually cut the cash rate. At that time the markets were expecting further rate cuts to follow.
Unfortunately, what did follow was a surge in the rate of inflation, which is a key indicator of economic activity, watched closely by the RBA. The Governor of the Reserve Bank, Michele Bullock, said in the February Monetary Policy statement that inflation rate would likely remain higher than the 2-3% target for some time. Ms Bullock also noted uncertainties globally and domestically which the Board was taken into consideration.
The next Monetary Policy decision will be announced on Tuesday 17 March. The RBA will be closely watching the inflation and employment statistics released by the Australian Bureau of Statistics in the lead-up to that meeting.
When the RBA changes the cash rate, lenders in the home loan market, especially the major banks, typically pass on that change – up or down, to their mortgage customers very quickly. In other markets, such as personal loans for goods such as motorcycles, rate changes can be varied.
On the back of their analysts’ forecasts, lenders that are expecting a cash rate change may alter the rates they are offering before the decision is announced. Other lenders may make changes to the same or a lesser degree than the RBA decision and some leave their pricing of some products the same to hold a competitive edge.
To find out which lender is offering the best rate on a personal loan for a motorcycle, buyers will need to cover off on as much of the market as possible. Being mindful that the rate advertised will be for new machines and for buyers that have a good credit score. To obtain the exact rate a buyer will be offered requires requesting a quote or conditional approval. Applying for the same loan from numerous lenders can have a negative impact on the applicant’s credit report.
Alternatively, loan seekers can engage the services of a finance broker that has accreditation with many lenders in the consumer lending market. Brokers, such as our Jade experts, can quickly match buyers with lenders and find the best offer without the process impacting the buyer’s credit report.
Tips for the Best Motorbike Finance Interest Rates
It is extremely important to secure the best possible rate when taking on finance. The rate determines the total interest to be paid on the loan which adds to the cost of the purchase of the motorcycle. A higher rate can mean higher monthly payments and potentially a longer time to repay the loan. Using our Finance Calculator, buyers can easily see how the interest rate affects the amount due each month and the total interest on the loan.
To ensure they secure their best rate, buyers can improve their financial position by paying off other debts and reducing expenses. Possibly cancel monthly subscriptions which are not being fully utilised. This may improve the credit score and prospects to be offered a lower rate.
Buyers can also give consideration to how much they are planning to borrow. Lenders will determine the borrowing power but borrowing a smaller percentage of the overall price of the machine, lowering the loan-to-value ratio, may mean a better rate.
Buyers can also use our expert services with connections and leverage with lenders to ensure they secure their best rate. Review our latest rates as a guide to the possibilities.
For the best motorbike finance interest rates, 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.
