A guide to motorcycle finance

Before you go out and buy that bike you have been eyeing up for the last few years, why not take a look at some finance options to help you get on the road.

Motorcycles are expensive but many people are now turning to low-rate motorcycle loans to make their dream of owning their own bikes come true. Interest rates tend to be lower than car finance loans and the repayment terms can be more flexible.

In this guide we will take a look at some of the best deals that you can get from low rate motorcycle loan providers.

Why take out a loan for your motorcycle?

A low rate finance option can be a great way to get your hands on a motorbike right away, without needing to wait until you’ve saved 100% of the purchase price.

The main types of motorcycle loans are secured and unsecured. With a secured loan, you might need to put down a deposit, for example 10%, with the remaining amount being covered by your lender. Your bike will used as security against the loan, so if you are unable to make repayments on time your lender can repossess it. Because you’re giving your lender this security, you’ll normally be able to access a lower interest rate.

With an unsecured motorcycle finance loan you usually won’t have to provide any deposit. The amount you borrow will be based on factors such as your income and credit history.  As your lender won’t be able to immediately repossess the bike if you’re unable to keep up with your repayments, they will want to ensure that you can afford it and this usually means higher interest rates.

With either loan type, you’ll need to make regular monthly repayments to pay back the loan plus interest is charged either monthly or annually.

Loan size – how much can you borrow?

Obviously your maximum loan amount will be dictated by the value of the motorcycle you want to buy. Other factors that affect how much you can borrow include your income and credit rating, how long you want the loan term for and how much you’re able to pay in monthly repayments. You can use a motorcycle finance calculator to understand how much you should borrow. 

How long should my loan term be?

Generally, the longer your loan term, the lower your monthly  repayments will be. While this can be great in the short term, it also means you’ll end up paying more overall in interest and fees on the loan. For this reason, it’s important to think about which is more important to you: saving money in the short term or long term.

Interest rates

The interest rate for motorcycle loans can vary significantly depending on your lender and how much you want to borrow. You should always shop around and compare the costs of using a specialist motorcycle finance provider.

It’s also important to remember that interest rates are not always fixed, so you could end up paying more if interest rates increase. On the other hand, your loan may be protected from interest rate rises which could cut the cost of your repayments.

Other costs to consider

Bear in mind that some motorcycle loans will also add on fees for administration and early repayment charges, which can also increase your total borrowing costs.

It’s also worth knowing whether some lender offers flexibility with loan repayments, so you can pay the loan off more quickly and therefore incur less fees and interest charges.