Whether you’re a veteran rider or a newbie, you know that motorbikes are not a purchase you can take lightly. In all likelihood, you’ll need some kind of motorcycle finance if you want to get something rugged, durable, and will last a long time. Before you go out into the wide world of dealerships and second-hand sellers, you should conduct a personal loans comparison – it might save you more than you bargained for.

What can you afford?

The most crucial question, to begin with, is – how much can you afford each month in loan repayments? Remember to factor in registration, insurance, fuel, and maintenance. You can work this out using a personal loan calculator. To get your approximate repayment amount, you need an interest rate, loan term, and how much you want to borrow. Make sure to look for comparison rates, as they include most of the statutory fees and charges that come with a loan, so you can make direct “apples for apples” comparisons.

Motorcycle finance

Do you have a deposit?

Lenders love it when borrowers have “skin in the game” from the get-go – it means they take on less risk. In return, you might get better interest rates, as Savvy’s Bill Tsouvalas explains. “Interest rates are the cost of borrowing money, but they’re set according to how much risk is involved for the lender. If you have a deposit a lender may pass on savings in the form of lower interest rates.”

Getting loan pre-approval

If you’re still shopping for that dream bike and in the “shortlist” phase, you may want to consider loan pre-approval. This essentially puts your loan “in the back pocket” and activates when you decide on a bike. “Think of it like this – instead of going through loan applications after you buy, you’re just doing it all beforehand. Having it done and dusted isn’t the best part – when you get conditional approval, you’re given an amount you can theoretically borrow. This is your price ceiling – if a dealer can’t match it, you have to walk away. When dealers get a whiff of pre-approval, they know they’re talking to a hot prospect. In that case, you have much greater leverage in the transaction.”

Motorcycle finance

Remember the extras

When considering your overall spend, remember that you’ll have to fork out for registration, insurance, fuel, leathers or helmets, and other accessories. “Factor that into your monthly spend, even if you do pay for most of it up front,” Tsouvalas says.

Make one extra repayment a year

If you can afford it, making an extra repayment a year can reduce your interest paid and put you ahead of the game when it comes to whittling down your principal. “Let’s say you take out $10,000 at nine percent interest per annum over the usual five years,” Tsouvalas says. “That reduces your loan term by five months, which reduces the overall interest you’ll pay on the loan. It’s an option worth exploring if you want to pay off your loan sooner.”