After an extended period of restrictions due to the COVID pandemic, many motorbike enthusiast are keener than ever to acquire a new bike and head off on a road trip. But the timing could be problematic in terms of finances. If income from a job or business has been impacted even marginally by the economic conditions prevailing over the past 2 years, there may not be a lot in the kitty for a deposit on a new motorbike. For buyers not wanting to make an upfront payment on a new motorcycle, no deposit motorbike loans are an option to seek out and consider.
To ensure buyers fully understand what is involved with a no deposit loan, including what is and isn’t eligible and other important factors, Jade Bike Loans provides this explainer.
What does ‘no deposit’ mean?
In general terms paying a ‘deposit’ usually refers to paying the dealer an upfront amount. Usually this is requested to hold the goods while the buyer finalises their finance or while the dealer completes the pre-sale checks, registration and prepares the motorbike for delivery.
But in the context we are discussing here, ‘no deposit’ in lender-speak means including the full purchase price of the motorcycle, even including some extras where applicable, in the loan. This ‘no deposit’ can apply regardless of whether or not a holding deposit has been paid to the seller.
By being able to include the full cost of the purchase, including registration, in the motorcycle loan, the buyer can keep their cash funds for other purposes. Where a holding deposit is paid to the seller and the buyer requests a no deposit loan, under most circumstances the seller usually will simply hold the deposit and return it to the seller after the lender settles the full payment.
Eligible Applicants, Eligible Motorbikes, Loan Types
All types of motorbikes would generally be eligible – street, off-road, adventure, cruisers, standard, and others, of all cc sizes and from all major manufacturers including BMW, Harley-Davidson, Suzuki, Kawasaki, Royal Enfield, KTM, Ducati to name just a few.
Primarily no deposit motorcycle loans would be available for new goods as the value and the purchase price could usually be deemed 'in sync'. Used motorcycle loans would be assessed in terms of the age and condition and the market value of the machine. If the value is lower than the amount of the purchase price and hence the loan amount requested, the lender may not approve a no deposit loan application.
While a loan applicant can ask for no deposit finance and we do offer the option, approval is still up to individual lenders.
Lender approval of no deposit finance will be based on a number of factors including:-
- Their risk assessment of the applicant in terms credit profile and other factors.
- Where the borrowing power and hence ability to repay the loan is not considered suitable for that amount. If the lender deems the borrower not suitable to take on the full ‘no deposit’ loan amount, they would request the loan amount be reduced.
If you’re not sure how you rate in credit terms, check your credit score and see if there are ways to improve your score prior to making your motorbike loan application. Reducing debt by paying off other loans and commitments may also contribute to a better loan offer.
No deposit loans are attainable across our loan portfolio:-
- Secured Bike Loan for buyers of machines for private use.
- Chattel Mortgage, Leasing and Commercial Hire Purchase for buyers that are purchasing a motorcycle for business purposes and/or for use in a business.
Effect on the Loan
As mentioned at the outset, a no deposit loans allows the buyer to keep their cash for other purposes. But by including the full purchase price of the bike in the loan, it increases the size of the total loan amount compared with paying an upfront deposit to the motorcycle dealer.
That larger loan amount would result in more total interest payable over the term of loan compared to the amount of total interest with a smaller amount.
Depending on the loan term and resultant loan repayments the larger loan amount may mean taking longer to pay off the loan and getting ownership in full of the machine.
A smaller loan amount ie paying an upfront and not a no deposit loan, may result in the debt being cleared sooner and the bike ownership achieved sooner.
The same bike loan interest rate would apply regardless of the loan amount. Lenders will assess and approve loans, set the interest rate and make a loan offer based on primarily the credit profile of the applicant.
With interest rates at historic lows after the RBA has kept them on hold since November 2020, it can make good sense to take advantage of the current cheap lending climate by applying for a no deposit bike loan.
Deciding if No Deposit is for You
The decision around whether or not a no deposit bike loan is the right way to go for you, will involve consideration of individual financial objectives. The decision may also hinge on the difference in loan repayments for a no deposit loan and when a deposit is made.
Use our Bike Loan Calculator to work up the figures to assist with your decision.
For a quote on a no deposit motorbike loan, 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.
