Interest rates had been in record historic low territory for about 20+ months due to the RBA’s stimulus response to the pandemic. This started in April 2020 when the central bank starting cutting the cash rate as part of the overall stimulus measures at a time when all feared the country could be facing dire economic conditions. This meant that interest rates including for motorcycle loans have been at the lowest ever for some time.
But those exceptional and extraordinary times came to an end when the RBA raised the cash rate at both its May and June meetings as it embarks on a procedure of normalising rates to address surging inflation. The RBA Governor Dr Philip Lowe has clearly indicated that further rate rises are ahead as the RBA seeks to stabilise inflation.
Recent economic data will be putting pressure on the central bank to raise the cash rate further. Some analysts are predicting a 0.5% or even 0.75% rise as early as the bank’s 5 July board meeting. Rises which will flow through to all lending sectors including motorbike finance.
For motorcycle buyers who had been planning to purchase a new bike with finance based on the rates of earlier in the year, decisions may need to be made. Do you proceed? Are cheaper motorcycle loans available? Where can the cheapest bike loans be found?
With more interest rate rises ahead buyers can follow some basic guidelines to ensure they secure affordable motorcycle loans at the lowest possible rates. We share our expertise, hints and tips for securing that dream bike with a motorcycle loan that doesn’t break the budget.
The Basics, Non-negotiables
For starters, if you already have a motorcycle loan at a fixed interest rate then increases in the cash rate by the RBA and rate rises by lenders will not affect your loan.
So that’s a key to our first basic tip – ensure you secure a fixed rate loan to avoid variations with further rate rises.
- Get a fixed rate loan. Variable interest rate loans can increase in line with rate rises. That would increase the repayments.
- Work towards achieving the cheapest interest rate by being smart with choice of lender.
- Use all the resources and professional services available to assist in securing the cheapest loan.
- Consider all elements of the loan and where and how they can be varied to achieve target repayments.
- Keep your credit rating in good order.
We now elaborate on these points to explain and guide loan applicants towards a cheaper motorbike loan.
Choice of Lender and Loan – Be discerning and diligent
Don’t go crazy applying to multiple banks and lenders to see which offers the best loan. This may sound like the right and sensible way to go. But what many do not realise is that multiple loan applications for the same finance and purpose can have negative repercussions on the applicant’s credit profile.
Don’t be impulsive. Signing up to finance offered by the motorcycle dealer may seem straight forward, quick and easy. But is it the cheapest possible offer you could achieve? Motorbike loans are available through a range of lenders including broker-style lenders such as Jade Bike Loans. Dealer finance may not be the cheapest compared with what we may be able to achieve for you.
Our services cover off on multiple lenders on your behalf so you are assured that we have covered the market in delivering the cheapest loan offer possible. Refer to our Interest Rate Comparison Chart to see how interest rates on bike loans can vary across the lender market.
Rates also vary in regard to fixed and variable. We secure our Secured Motorcycle Loan at a fixed rate which means the rate, the repayments and other loan features remain unchanged despite any moves by lenders to increase rates.
This the most popular type of loan for new and many second-hand bikes. Some lenders may call this a more general Secured Personal Loan to cover a range of goods including bikes, boats and caravans.
We offer pre-approved motorcycle finance so buyers can tee-up their loan before the purchase. This allows buyers the benefit of being able to look at bikes in their loan repayment zone and not be caught out committing to a price tag that is beyond their budget.
Loan Term – Can it be varied?
Varying the loan term varies the loan repayment amount. The repayment can be the main target when seeking a motorcycle loan. This is what you’ll need to meet each month and as such it must sit well with your other expenses.
Some lenders will have set guidelines in regard to the term of motorcycle loans they will approve. An advantage of having Jade source your loan is having your consultant negotiate with our lenders on approving the preferred loan term, wherever possible.
Use our bike loan calculator to see how loan terms change repayments and start to work out how you would prefer your loan be structured.
Loan Amount – Cheaper model?
No brainer but the total amount of the loan requested clearly affects the repayments. If a target repayment amount is required, perhaps consider a cheaper model. Using the resources of our loan calculator and requesting pre-approved finance can greatly assist in matching the bike to the loan repayments.
Yes or No to a Deposit?
No deposit finance is available through us and other lenders. This means the complete purchase price and even some extras is included in the bike loan. This can be a great way to go when interest rates were at historic lows. But as rates are on the rise, opting for no deposit may not achieve an affordable outcome.
Making a down payment to the dealer, if possible, can reduce the overall loan amount and thus reduce loan repayments. Got a tax return due this year? Could be the perfect bike deposit to achieve an affordable loan.
Credit Rating – Do a credit-selfie to check your profile
Forget selfies at special locations and do yourself a favour with a credit-selfie. Check your credit profile and take steps to improve the rating wherever possible. The credit profile is a key determinant of the interest rate and loan conditions that lenders will offer.
Tips and hints can be found at Moneysmart but essentially – make all bill payments on time and reduce other debts including credit card balances prior to applying for a new loan.
Inflation is continuing to rise putting pressure on costs of living and the RBA to raise rates further. Taking sensible steps and practical actions can be extremely beneficial in securing an affordable motorcycle loan to address these issues.
For an affordable motorcycle loan, 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.