Everyone wants to get the best motorcycle loan interest rate possible.
With all the different motor financiers available, and a wide range of products with completely different criteria, it can make the task of securing the best available bike loan interest rate very confusing.
Here are some tips that may assist you in securing a sharp interest rate for your new motorbike.
Tip 1 – Employment Stability
The longer you have been with the same employer shows commitment on your behalf, and also will give the motor financier some sense of certainty that the level of income you are earning now, will be most likely secure and will continue on throughout the loan term. Your employment is your source of income and the lender will be more comfortable knowing that you will not have down time in between jobs, unlike someone that moves from job to job quite often.
Tip 2 – Residential Stability
When obtaining a bike loan, your interest rates are discounted as the lender uses the motorbike as security over the loan, which means if you default on your loan, the motor financier may have the legal right to repossess your bike. If you move from place to place so often, the automotive financier may feel that if they were in the position where they were to repossess your motorbike due to loan default, you may be difficult to find and may deem you a risker applicant. So the longer you stay in your residences, the better chance of securing a good motorbike loan interest rate you have.
Tip 3 – Credit File
Applying to many financiers in search of the best loan interest rate can actually result in achieving a worse loan interest rate, or even can result in your loan being declined. The motor financiers will look at your credit file as a first impression of you, and if you have had multiple enquiries in a short period of time, this does not look good as a first impression, and the lender may refer to you as an “active credit seeker”, which they feel is hard to determine which loans you have accepted and which ones you haven’t, as your credit file does not state this information. Try and get it right first time and don’t apply until you are comfortable and committed to the best quote you have received. You can us e a free service like this one to check your credit rating for a motorbike loan without affecting your credit score.
Tip 4 – Borrowing Less Than The Full Amount
The term “loan-to-value ratio” or “LVR”, means the amount you borrow against the asset. For example, if your motorbike is worth $20000 and you only want to borrow $10000 against that bike, your LVR is 50%. The lower your LVR, the better chance you have of securing a better bike loan interest rate. Lowering your LVR can be done with cash deposit, trading in your old vehicle, or just getting your motorbike at a really good purchase price.
Tip 5 – Brand New Motorbikes vs Used Motorbikes
When you purchase a brand new motorcycle, every motor financier will allow this vehicle to be financed with their lending guidelines, giving you more lender options and negotiating power. Once you move in to used motorbike territory, each and every lender will place some restrictions around this, whether the restriction could be where it is purchased from, the actual age of the bike you are buying, or the interest rates may increase based on how old the bike is. You can still achieve the same good loan interest rates on used motorbikes, but they will be harder to find than on brand new bikes.
ABOUT THE AUTHOR
Timothy Newton is a motorbike enthusiast and works as a finance office for a local bank in Australia. On weekends Tim likes to go riding through the hunter valley in NSW. One day he would like to tour Europe on a vintage motorcycle with his best mates for three months. Tim currently owns and rides a Honda CBR1000RR Fireblade.