A motorbike loan generally functions like a standard vehicle loan, with some extra conditions to satisfy prior to settlement.
This category of loan can be sourced through banks, specialised lenders, and manufacturer finance options.
The lender will register a security interest on the bike that will stay in place until the loan is repaid in full.
Where a motorcycle loan may differ is when there are license restrictions for the borrower that must align with the type of bike being purchased.
In this article, we’ll discuss these restrictions and the full application process to secure finance for your new motorcycle.
Key Takeaways: Motorbike Finance
| Learner Approved Motorcycle Scheme | If you are a learner or provisional rider, lenders will verify that the bike you are financing complies with the LAMS before funding the loan. |
| Secured vs Unsecured Bike Loan | Just like other vehicles, you can get a secured loan (using the bike as collateral) or an unsecured personal loan (higher rate, but more flexible). |
| Mandatory Insurance | For a secured bike loan, lenders require you to have active Comprehensive Insurance before they will release the funds. |
Bike Finance for New License Holders
A quick word of caution for those who have only just secured their rider’s license.
Before deciding on the bike you want to finance you should check it meets the criteria of the relevant Learner Approved Motorcycle Scheme (LAMS) in your state.
These rules limit the allowable power to weight ratio of the bike, and imposes restrictions on modifications.
There is no point financing a new bike that you cannot legally ride.
The good news is that lenders will check this as part of their conditions of secured financing for a bike.
Secured vs Unsecured Motorcycle Loans
A secured motorcycle loan provides funds to purchase a bike, which you repay over a fixed term.
The motorcycle acts as collateral and the lender registers a security interest in the asset until the loan is repaid.
This means that they can repossess the bike if repayments stop and reduces the risk to the lender.
As a result, the interest rate is generally cheaper and the terms more flexible.
If the bike you want to purchase does not qualify as viable security, or you just don’t want to provide collateral, you can opt for unsecured finance.
This is just a standard personal loan and you are free to do whatever you like with the borrowed funds.
Because the lender assumes significantly higher risk, you face steeper interest rates and potentially tighter lending criteria to secure an approval.
If your motorcycle qualifies as acceptable security, a secured loan is always your lowest-cost path to a market-leading rate.
Preparing Your Motorcycle Loan Application
A motorbike loan application will operate in the same way as a secured car loan.
Your credit history and finances will be assessed to determine your capacity to repay the loan, and what interest rate is appropriate for your risk profile.
If you are unsure that you will qualify then get in touch with our team below so we can do a preliminary assessment.
This will give you some certainty of the outcome, without risking a rejection and a hit to your credit score.
Our brokers can also look at our full panel of 50+ lenders to find you the cheapest deal.
Calculating the Cost of Your Motorcycle Loan
Some lenders will advertise low headline rates that hide establishment and processing fees.
To find the actual cost of your motorcycle loan, you’ll need to calculate all associated fees plus the interest expense.
This may include the following:
- Interest rate
- Establishment fees
- Risk fee (if applicable)
- Any ongoing fees
- Loan term and repayment frequency.
As you can see, there is more to this than just the interest rate. Check out our calculators page if you want to see what your repayments could be.
Approval and Settlement Timeline
If your application is complete and requires no additional documentation then you can be approved on the same day with many lenders.
We process all applications digitally for convenience and speed with the following essential documents .
- Proof of identification
- Recent income evidence (payslips)
- A summary of your current liabilities
In some cases we may need 90 days worth of bank statements, but only in cases of a low credit score or another issue where closer examination is require.
The final piece of the puzzle is the bike itself.
A lender will require an invoice from the dealer and details of the asset to ensure it meets their security criteria.
Financing for a Private Sale
We usually encourage dealership sales so that the borrower has a level of protection when buying the asset.
But if you have your heart set on a bike being sold privately, it is still possible, but with extra steps.
You have to check if there is any money owing on the bike and should conduct a search on the Personal Property Securities Register (PPSR).
You will also need to provide a range of details and seller information to the lender before the loan can be settled.
It can be quite extensive and a lot of extra work for the buyer to purchase privately.
Comprehensive Insurance Requirements
Lenders will require comprehensive insurance for a secured motorbike loan to ensure the value of the asset is protected.
They will insist on proof of this prior to releasing your loan funds through a Certificate of Currency that specifically lists the financier as an ‘interested party’.
Motorcycle insurance premiums can be high and you should factor this into your budget.
Frequently Asked Questions
Do I need comprehensive insurance if my bike is financed?
Yes, almost all lenders require active comprehensive insurance before settling a secured motorcycle loan. You must provide a Certificate of Currency listing the financier as an ‘interested party’.
Can I buy a motorcycle privately if finance is owing?
Yes, but a PPSR check will reveal an active security interest. The only safe pathway is obtaining a formal payout figure and arranging a lender-controlled settlement to clear the debt.
Are balloon payments a good idea on a bike loan?
They are excellent for managing monthly cash flow, but risky without a solid plan. At the end of the loan term, you must pay the lump sum in cash, refinance the remaining balance, or sell the motorcycle.
Your Motorcycle Finance Action Plan
Whether choosing a secured or unsecured loan, lenders assess three factors:
- Your credit history.
- If the loan is affordable.
- The bike meets security requirements and license restrictions.
The Gusto team can assess all three before submitting a formal application to a lender, while also comparing the market instantly to get you the cheapest rate on a bike loan.
Click below to get started.
