Interest rates are key to all types of loans and finance including motorbike loans. For those that currently have a bike loan or are considering purchasing a new bike with finance, you are probably aware of the prospect of a ‘rate rise’. While aware, you may not fully understand what ‘rates’ this rise relates to and how it may play out in regard to motorbike loans.
We provide an explainer on the connection between decisions made on interest rates by the Reserve Bank of Australia and the interest rate applicable to motorbike loans. How those decisions may impact current loans and new loans and how those applying for a motorcycle loan can achieve the cheapest possible interest rate loan.
Role of the RBA
The Reserve Bank of Australia (RBA) is Australia’s central bank. Its primary role is to set monetary policy for the country and that includes setting the cash rate. This is, in the simplest terms, a lending rate for bank-to-bank lending. It is not the interest rate that lenders apply to their loans.
The RBA is independent of Government and makes its decisions on the cash rate based on an analysis of economic data. Most specifically in regard to interest rates, unemployment and inflation figures.
The Board of the RBA meet on a monthly basis (with the exception of January each year) to make a decision as to whether or not to change the cash rate. During the economic crisis of the pandemic the RBA cut the cash rate a number of times as a stimulus measure. In November 2020 the Board cut the rate to 0.1%, the lowest rate ever. The rate has been held at this record low since that time.
But as the country has recovered from the economic impacts of the pandemic, unemployment has fallen and inflation surged. Conditions which are pointing to the RBA acting in the very near future to raise rates. Many analysts and lenders, including one of our major lenders, Commbank, strongly consider the RBA will move on rates at their June 2022 meeting.
RBA and Lender Connection
The rate that the RBA sets becomes essentially a starting point for banks and lenders to decide the interest rates they will apply to their loans. They add in their own costs and considerations including risk factors in certain markets and their interest in being competitive in a certain lending sector.
The lending rates vary across banks and lenders and across different types of loans. You may notice that the interest rate on say a home mortgage is different from the interest rate on a car loan or a motorbike loan.
When the RBA moves on rates the lending markets respond. By how much each cuts or raises their rates will depend on their individual guidelines.
Factors Impacting Bike Loan Interest Rates
From that general perspective, we come down to the interest rate which individuals are offered on their motorbike loan.
That rate is arrived at by our individual lenders and can be impacted by:-
- Credit rating of loan applicant
- Application specifics as assessed by lenders on a risk basis
- Age and condition of the motorcycle – used motorcycles may attract a higher rate as lenders will take into account the age and condition when preparing a loan offer.
When browsing motorbike loans, note the conditions which are usually that the advertised rate and comparison rate apply to new goods (motorbikes) and for loan applicants with a good credit rating.
Comparing Motorbike Loan Interest Rates
There are differences across the market in terms of interest rates. We have prepared a table which enables those interested in applying for a bike loan to easily review the rates currently being offered by a group of lenders.
Current Bike Loans
So what happens to a current motorbike loan if the RBA and lenders increase their interest rates? The answer depends on the type of loan.
If the bike loan has been arranged with a fixed interest rate, there will be no change. The rate and the loan repayments remain the same. Jade Bike Loans sources Secured Bike Loans at a fixed interest rate to provide assurance to our customers that their loan won’t change.
If the bike loan however has been arranged with a variable interest rate, there is the possibility that the lender will increase the interest rate. An increase in the interest rate will impact the monthly loan repayments.
New Motorbike Loans
For those considering applying for a loan to purchase a new motorbike, your Jade consultant will source a loan offer which will be based on the interest rate that is current at that time. Loan offers, including pre-approved motorcycle loans, are valid for a set timeframe. That will be advised at the time we present you with the offer.
If there is a delay with the purchase and the offer expires before used and then re-requested, the offer would need to be re-quoted. If the interest rates rise in that interim, a higher rate may apply.
Achieving the Cheapest Motorbike Loan
Despite the prospect of rates increasing across lending markets in coming time, Jade Bike Loans will always focus on achieving the cheapest interest rate loans possible for our customers. Using our services allows for fast and expert coverage of a vast number of banks and lenders to identify the cheapest loan. Negotiations are carried out on your behalf to achieve the lowest rate and loan conditions that best suit individual preferences.
What loan applicants can do themselves is to ensure they keep their credit score and profile in good order. If planning to purchase a new motorbike with finance soon, it can be highly advisable to act sooner rather than later when the RBA may have raised rates.
For a cheap interest rate motorbike 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.