How to Get Motorbike Finance for a Used Bike

Buying a used motorbike in Australia can be an affordable way to enter the world of motorcycling, but securing finance for a second-hand bike requires understanding your options. Financing a used motorbike is possible through various lenders, but it comes with its own set of requirements and considerations. Here's how you can secure motorbike finance for a used bike in Australia.

1. Understanding Used Motorbike Financing

Used motorbikes are typically financed through either a secured loan or an unsecured loan. With a secured loan, the motorbike acts as collateral, which means the lender can repossess the bike if you fail to repay the loan. Secured loans are often the preferred option for used motorbike buyers because they tend to come with lower interest rates compared to unsecured loans.

Unsecured loans don’t require collateral, but they generally come with higher interest rates, as the lender faces a higher risk. While unsecured loans are available for used bikes, they might not be the best option if you want to keep interest rates down.

2. Eligibility Requirements

Before applying for motorbike finance, ensure you meet the basic eligibility criteria. Most lenders will require the following:

• Proof of identity: You’ll need to provide documents like your passport, driver’s license, or any other government-issued ID.
• Proof of income: Lenders want to ensure that you have a stable income to make loan repayments. Pay slips, tax returns, or bank statements are typically required.
• Good credit history: While some lenders may approve loans for individuals with bad credit, those with a good credit score are more likely to receive favorable interest rates.
• Deposit: Offering a deposit can reduce the loan amount, making you more attractive to lenders. A larger deposit lowers the risk for the lender and can help secure better loan terms.

3. Loan Amount and Interest Rates

The loan amount for a used motorbike will depend on the price of the bike, your income, and the amount of deposit you can provide. Lenders generally prefer to finance up to 80% or 90% of the purchase price of a used motorbike, meaning the remaining 10% to 20% will need to be covered by you.

Interest rates for used motorbike loans in Australia vary based on factors such as your credit score, the type of bike, and the loan term. Rates for used motorbike loans typically range from 5% to 15%. It's important to compare rates from different lenders to ensure you're getting the best deal.

4. Choosing the Right Lender

When seeking finance for a used motorbike, it’s essential to shop around and compare offers from different lenders. Options include:

• Banks and Credit Unions: These traditional lenders may offer competitive rates, especially if you have an existing relationship with them. However, they may have stricter criteria for approving loans for used bikes.
• Specialist Lenders: There are lenders that specialize in motorbike finance, including for used bikes. These lenders may be more flexible in their requirements, though they may offer higher interest rates.
• Online Lenders: Online lenders are increasingly popular for motorbike loans. They can offer quick application processes, and some may offer more competitive rates for used bike financing. Always check for hidden fees and terms before committing.

5. Loan Terms and Conditions

When applying for motorbike finance, be aware of the loan terms. Most loans for used motorbikes in Australia have terms between one and five years. Shorter loan terms often come with higher monthly repayments but lower overall interest, while longer terms can reduce your monthly payments but increase the total cost of the loan.

Ensure that the loan term and repayments suit your budget. For example, a loan term of 36 months might seem affordable with lower repayments, but it could end up costing you significantly more in interest than a 24-month loan.

6. The Application Process

The application process for financing a used motorbike is straightforward but requires some preparation. Typically, the process will involve:

1. Choosing the Bike: Decide on the make, model, and year of the used motorbike you want to buy. Be sure to get a clear idea of the bike’s value, condition, and history before proceeding with financing.
2. Researching Lenders: Compare different lenders’ interest rates, fees, and loan terms to find the best deal for your financial situation.
3. Applying for the Loan: Fill out the loan application form, providing all necessary documents such as proof of income, identity, and the bike’s details.
4. Approval and Purchase: Once your loan is approved, the funds will be disbursed, and you can proceed with purchasing the used motorbike. The lender may pay the dealership directly, or you may need to settle the payment yourself.

7. Tips for Securing the Best Deal

• Check your credit score: Knowing your credit score before applying can help you understand the rates you may qualify for. If your score is low, work on improving it before applying.
• Consider a larger deposit: A bigger deposit can lower the amount you need to borrow and reduce your monthly repayments.
• Negotiate with the seller: Some motorbike dealers may offer deals or discounts, which could reduce the amount you need to finance.
• Review the fine print: Always carefully read the loan agreement and ensure you understand the interest rate, fees, and repayment terms before signing.

8. Conclusion

Securing motorbike finance for a used bike in Australia is entirely possible, as long as you meet the necessary criteria and understand your options. By shopping around for the best rates, considering a secured loan, and ensuring you can comfortably afford the repayments, you can find the right finance option for your needs. With proper planning and research, you'll be on the road with your used motorbike in no time.

DISCLAIMER

The information provided on this website is general in nature only and has been prepared without considering your financial needs, circumstances and objectives and should NOT be construed as financial, taxation or legal advice. For more information, get in touch with our experienced partner brokers today.