When it comes down to it, it is easy to forgive one for thinking that motorbike finance is the same as car finance. However, there are some stark differences in the way lenders view motorbike financing.
If you are interested in purchasing a motorbike and are looking to take out a loan to fund it, it would do you well to be prepared for these differences and manage your expectations accordingly.
Here are some ways that motorbike financing differs from car financing:
There Is A Bigger Risk Factor
It is not controversial to say that motorbikes, as a form of transportation, are inherently riskier than cars. Motorbikes do not offer the same kind of protection to the rider as a car might. There are no airbags, roll cages or seatbelts, which means that motorbikes result in a significantly higher number of injuries and deaths than any other kind of vehicle on the road.
Not only do riders put themselves at significant risk whenever they get on the road, but the motorbike itself is also at risk of being destroyed in an accident. When lenders consider lending money, they need to factor in the risk of not being repaid. Dead motorbike riders cannot repay their loans, and destroyed motorbikes cannot be reclaimed or repossessed to compensate lenders for their losses.
Therefore, motorbike loans typically come with significantly higher interest rates than car loans, owing to the fact that there is greater risk involved. Cars are inherently safer to drive, which means there is less risk involved, resulting in lower interest rates.
There Is A So-called Recreational Aspect
Despite the fact that many commuters choose to use motorbikes as their primary transportation mode, many lenders still view motorbikes as recreational or luxury vehicles, no matter how much is said to convince them otherwise. Because motorbikes are often seen as luxury or recreational vehicles in the eyes of many lenders, they will often push the interest rates higher.
Adding to this perception is the fact that there are far fewer motorbikes on the road than cars. In some cases, the type of motorbike that you purchase will either alleviate or exacerbate this view in the eyes of the lender. High-end high-speed racers or expensive name-brand cruisers might very well be seen as luxury vehicles that are used for recreational purposes.
However, workhorse motorbikes, such as those used by delivery drivers, might be seen as less of a recreational vehicle and more of a utility vehicle. Whatever the case, you can expect the lender to make borrowing money for a motorcycle more expensive.
Thankfully, the overall cost of motorbikes is significantly less than cars, which offsets the added cost of higher interest rates.
There Are Higher Insurance Costs
Although insurance does not typically factor into your car loan, it should be considered when attempting to finance a motorbike. As with any vehicle, it is common sense to take out an insurance policy on the vehicle before you drive it out of the lot. If you do not, you place yourself at significant financial risk. Some purchase agreements add insurance into the mix as a mandatory part of the deal.
Be advised that some Insurers might have higher premiums for motorbikes duo to the higher risk associated with some motorcycles.
To get help with your motorbike finance today, contact us at iCREDIT now. We can help you find the best deal!