After an extended summer with high humidity, the trademark autumn morning chill has appeared and with that many start thinking of road trips! Autumn is a very popular season to get out and about for short getaways or long, leisurely country rides. If you’re planning an autumn road trip and would like a new ride apply for a motorbike loan while interest rates are still low to purchase a new model.
The interest rate climate has been exceptionally accommodative for borrowers in the past few years. But what hasn’t been so accommodative has been the opportunities to get out and about and the chance to visit motorcycle dealerships to see the latest models, test ride and proceed with that purchase.
Now the planets are aligned with restrictions lifted, new models on the market despite supply chain issues and interest rates on motorcycle loans are still low. But that may change in coming months, at least in respect to interest rates.
We explain the interest rate situation and what is the most popular bike loan available to purchase a new motorbike.
Motorbike Loan Interest Rates
Interest is the main cost of finance so paying attention to interest rates can pay off for those seeking loans. Interest rates vary across different types of loans and across different lenders. Different lenders will charge varying rates for say the same loan for a motorbike. Why? The Reserve Bank of Australia (RBA) has the role of setting what is known as the official cash rate. That is not the rate that borrowers are charged on finance but a bank-to-bank lending rate.
Banks and lenders essentially start with the cash rate and then build in their costs and their risk element for different markets to establish the interest rate that they will charge for the specific loans.
Currently the cash rate is at 0.1% and has been since November 2020. This is the lowest it has ever been and was lowered to this rate as part of the RBA’s monetary policy as a stimulus measure during the peak of the COVID-19 economic crisis.
Many analysts and economists have been calling for the RBA to lift the rate. First the calls were to cool the housing prices but now it is to arrest rising inflation figures. So far the RBA has remained solid and said it would show patience for the economy to reach its targets for a rate rise.
But with unemployment now at 4% in that target range and inflation increasing, the RBA has changed its talk to a rate rise being a ‘probability’ in 2022. Some analysts predict we could see several rises in 2022.
When the cash rate rises, this increase flows through to lending markets. Individual lenders will decide how much of an increase or decrease to pass on to customers. But essentially, despite our focus on always achieving cheaper interest rates, it is highly possible that the rate we can achieve on motorbike loans now compared with say later in the year may be quite different.
Refer to our Interest Rate comparison chart to see how higher rates from some lenders effect the monthly repayments. Yes, it can be significant. Interest rates also vary according to the credit profile of the applicant. So ensure yours is in good order before applying.
The other aspect to look for in a motorcycle loan is whether or not the rate is fixed or variable. A variable interest rate can increase or decrease as official rates change. A fixed rate remains constant for the entire term of the bike loan. So no changes to repayments with fixed interest rate loans.
Secured Bike Loans
Jade Finance offers the Secured Bike Loan which has a fixed interest rate, fixed loan term and therefore, fixed monthly payments. The bike forms the security against the loan. This loan suits most bikes, new and most used models. Lenders will register the machine as security with the PPSR.
If you choose, you can make extra payments on a Secured Bike Loan, with only minimal break fees applicable when the loan is finalised prior to the agreed loan term conclusion. A tax refund may be coming your way through the Low and Middle Income Tax Offset. These funds could go towards the bike loan.
If you want to know how much you may be approved for your bike loan prior to deciding on a specific model, speak with us about a pre-approved bike loan.
If you’ve left your purchase to the last minute, no problem. Our consultants can respond asap with quick quotes and fast approvals to get your loan organised at the cheapest interest rate. The RBA Board meets monthly to make their decision on interest rates. Get in before any rate rise by applying for your motorbike loan today.
Contact Jade Finance 1300 000 008 to apply for a motorbike loan.
DISCLAIMER: NO LIABILITY IS ACCEPTED IF ERRORS OR MISREPRESENTATIONS ARE FOUND IN THIS ARTICLE. THE ARTICLE IS PREPARED AND PRESENTED FOR GENERAL INFORMATIVE PURPOSES AND IS NOT INTENDED TO BE THE SOLE SOURCE OF INFORMATION FOR MAKING FINANCIAL DECISIONS. THOSE REQUIRING GUIDANCE AND ADVICE SHOULD CONSULT A FINANCIAL ADVISOR.