Buying a motorcycle is a big decision; it can be even easier if you have the right financing. At this point, you might be asking: what are the different options? This guide will answer this question by exploring the different types of loans available for motorcyclists in Australia.
Hire purchase finance
According to a report, when purchasing a motorcycle, most people turn to hire purchase motorcycle finance. This is a popular option for many reasons. The main reason is that it’s Australia’s most common form of finance.
Hire purchase is also called PCP or personal contract purchase as it allows you to hire the bike from an approved lender over a period of time, usually three years at a time, with one year rolling over each year until all payments have been made.
It’s not secured against the purchased product, so there’s no risk to the retailer if you default on your payments. This means there’s no interest rate applied to hire purchase loans, which can make them more affordable than other types of finance.
You can pay off your loan early or extend it beyond its original term at any time. If you choose to repay it early, you’ll receive payment for whatever remains outstanding on your contract immediately; this is known as “ballooning” because most contracts are paid off at once at the end rather than in monthly or weekly instalments (also known as amortisation). You could also take advantage of this option by extending one month into two months and so on until all payments are made in full before ballooning occurs. This method helps reduce interest costs by spreading them out over longer periods at lower rates depending on how much money has already been paid off during those first few months after making initial contact with a broker.
Unsecured personal loan
- An unsecured personal loan is a good option for people with bad credit. This type of motorcycle finance is not secured against your motorcycle, so it doesn’t matter if you have bad credit or no credit history.
- You can use this to pay off any expense, not just the one for your motorcycle. If you need money for anything other than buying a motorbike, then an unsecured personal loan could be right up your alley!
These loans are not secured against your vehicle, so they may come with higher interest rates as a result. Interest rates are determined by several factors, including:
- Your credit score
- How much do you owe on other loans (if any)?
- Your income
You should shop for the best deal and read the fine print before agreeing to anything.
A novated lease agreement
A novated lease is different because it allows you to use the motorcycle you are leasing as security against the loan. If you do not make your payments, the bank has the right to repossess your motorcycle and sell it to recover their money.
However, if you are careful about ensuring every payment is made on time and in full. A novated lease may be an ideal way for you to get your dream machines without having all of your money tied up until they take you off everything at once after several years.
Besides these, there are also a few other options available, and the right dealer can help you find the right one for your circumstances.
