There’s plenty to think about when choosing a motorcycle loan, so we asked finance expert Kevin Bolton* for his advice to make sure you get the best loan for your individual circumstances.
Five Key Factors to Consider When Shopping for a Motorcycle Loan:
1. Interest Rates
Rates are the main yardstick that people use when comparing loans. I prefer to think of them as being like a headline in a newspaper. They grab your attention but don’t necessarily tell you the entire story. The interest rate is going to play a big part in determining the cost of your loan so it’s a good place to start but don’t fall into the trap of thinking that the rate is the only element to consider.
Fees are another factor that will directly impact on your cost of borrowing. They’re not displayed as prominently as interest rates but you need to find out what fees apply and how much they are before proceeding with a loan. Beware of being lured in by attractive headline rates only to find out that the deal involves high set-up and ongoing account keeping fees.
3. Loan Security
Most loans involve the lender using the motorcycle that you buy as security. In other words, the bank or finance company have some rights over the motorcycle which could potentially allow them to repossess it if you were to break your agreement and miss your loan repayments. When it comes to selling or trading in your motorcycle a secured type loan needs to be paid off in full before the sale can be finalised. If you want the flexibility of an unsecured loan expect to pay a higher rate for the privilege.
4. Loan Inclusions
Make sure to check that the loan will cover everything that you want it to. Most Banks and Finance Companies will limit how much they lend against the value of the motorcycle. So if you’re planning on including apparel and accessories or maybe the cost of an extended warranty in the loan, check out whether the lender will be prepared to include this for you. Otherwise you could be left with an unexpected bill to pay!
5. Early Termination
If you think that you may want to occasionally pay extra off your loan or if you’re planning to pay the loan off early with a lump sum, make sure to check beforehand that your loan allows you to do this. If your loan does provide this flexibility check out if there are there any costs associated with it.
Kevin Bolton has worked in personal and business finance for nearly 20 years in Australia and the UK. His expertise is in lending with a particular focus on the automotive sector. He has recently developed a customer-focussed website, www.LoanPlace.com.au. It provides users with independent information and insider tips, helping them to learn about how financing works and how to find the best loan deals for their individual circumstances.