3 Steps For Refinancing Your Motorcycle Loan

There are many reasons why you might be looking to refinance your current motorcycle loan; maybe your financial situation has changed and you’re looking to change the amount you pay in monthly repayments, or perhaps you’re simply looking to take advantage of today’s low interest rate environment and get a great deal. No matter the reason, Driva can help you refinance your existing motorcycle loan.

What is refinancing?

When you refinance a motorcycle loan, you’re essentially replacing your existing loan with a new loan from an alternate lender to pay off the debt of the old loan.  

You should only refinance your motorbike when the new loan has better terms or features than your existing loan. In Australia’s current economy with its low interest rates, now could be a great time to refinance your loan. Because bike loans are a fixed rate product, your rate doesn’t change over the life of the loan. This means that the only way you can benefit from reduced interest rates or an improved credit score is to refinance your existing motorcycle loan.

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    When should you refinance your bike loan?

    If you’ve improved your credit score

    If your credit score has recently improved, you may want to refinance in order to get a better interest rate on your loan. Because inquiries and defaults on your credit file are only recorded for five years, if enough time has passed your score may have improved dramatically, making you eligible for a loan with a much lower interest rate. 

    If you want to extend the length of your loan

    If you’re currently struggling to meet your monthly repayments, you might be interested in extending the length of your existing bike loan. This would reduce your monthly repayments, which would make meeting your other monthly expenses easier. However, it’s also important to keep in mind that the longer the loan, the longer you have to pay interest for. This is why it’s important to consider the total loan cost before committing to refinancing. 

    If you want to take advantage of interest rate cuts

    With Australia’s current low interest rates, now is a great time to refinance your motorbike so you can reduce your monthly repayments. Because bike loans are fixed rate, the only way you can get a lower interest over the course of your loan is by refinancing. 

    If you want to get a better deal

    If you didn’t get a great deal on your bike loan the first time. When you originally took out your bike loan, you might not have gotten the best possible rate. While your current lender won’t change your rate, you can refinance your loan to get a better rate with an alternate lender.

    Use Driva’s online smart refinancing platform to calculate the savings you could make by refinancing your bike loan. You can also check out our motorcycle loan calculator tool.

    Get your lowest rate from 30+ lenders

    What should I consider before refinancing?

    Weigh up savings versus costs of refinancing

    If you’re deciding whether refinancing your bike is worth it or not, it can be helpful to weigh up the savings versus the costs of doing so. The potential savings of refinancing are abundant; refinancing can help you get a better deal with a lower interest rate and monthly repayments, decreasing the total loan amount and saving you money. 

    However, it is important to make sure that these savings are not outweighed by the costs of refinancing; depending on your lender, there may be exit and application fees, so make sure you find these out before committing to refinancing (or talk to a Driva lending specialist who can help you find out). 

    Additionally, make sure you consider how much time is left on your bike loan. If you’re towards the end of your term, it might not be worth it to refinance your bike. 

    Consider your credit rating

    Finally, it is important to consider your credit score before refinancing your bike. Even if you have a bad credit rating, you still might be eligible for a loan with some of the lenders on our panel. If your credit rating has improved over the course of your previous loan, lenders would view your application more favourably, because they now view you as a lower risk borrower. This would then make it easier to get a more competitive rate. It’s important to keep an eye on your credit rating, as it impacts your ability to secure any type of loan, from a personal loan to a car loan. You can access your credit history for free directly from Equifax.

    Can you refinance a Harley Davidson loan?

    Yep! If you’re not completely satisfied with the conditions or rate on your current Harley Davidson loan, or you’d just like to take advantage of your recently improved credit rating, we can help you refinance your loan.

    What is a good interest rate for a motorcycle loan?

    At Driva, we work with lenders who can offer interest rates from as low as 3.35% (4.85% comparison rate).

    Step 1: Get up to date

    Contact your current lender

    The first step to refinancing your motorcycle loan is to make sure that you’re up to date on your current loan repayments. If you’re currently behind on your repayments, you’ll be unable to get a new loan at a lower rate. 

    You’ll also need to call your current lender and ask what the ‘pay-off amount’ is. This refers to your current debt amount, and you’ll need this information to tell your new lender so that your loan can be approved. Your lender will give you a payoff amount that is valid for a set period of time, i.e.: two weeks. 

    Additionally, find out what one-off or ongoing fees you will incur when refinancing. For example, your current lender may charge an early payoff penalty fee, and your new lender may charge application fees. With Driva’s online platform, all fees and charges are built into the price you see, so you won’t need to worry about any hidden fees down the road. This means that the monthly repayment figure you see is exactly what you’ll pay each month. 

    Consider the value of your bike

    When assessing your refinancing options, make sure you consider the value of the bike that you’re looking to refinance. If, for example, you owe more money to your lender than the bike is worth, you may be seen as a ‘higher-risk’ borrower by lenders, making it harder to get a loan.

    Step 2: Compare bike loan options

    Get personalised quotes with Driva

    The next step is to compare your loan refinance options through Driva’s online smart refinancing platform. The process takes just a couple of minutes, and we only need some information about you, the motorcycle that you’re looking to refinance and the original loan balance and term, before we can provide you with your personalised quotes

    Simply follow the prompts and select “I want to refinance my vehicle”, and we’ll do the work to find you the best competitive rates. Driva works with a panel of over 30 lenders so you can be confident that you’re getting the best deal possible. 

    When you enquire about your motorbike loan options with Driva, we run what’s called a ‘soft credit check’. This means that we’re able to access your credit score (that lenders use to price your loan) without recording an inquiry on your credit file or affecting credit rating. 

    Compare quotes against your desired criteria

    Before deciding on a motorbike loan, make sure you check that it meets all of your desired criteria. For example, you might prioritise getting a longer loan term to keep monthly repayments low, or perhaps you’d really like to have flexibility around making additional repayments without any penalties or early repayment fees. 

    Check the comparison rate

    When comparing loans, it can be helpful to look at the comparison rate of each loan, as it includes nearly all fees (excluding stamp duty), so is the most accurate representation of the cost of the loan. In addition to the comparison rate, make sure you also consider what the total cost will be over the life of the loan. 

    Step 3: Apply for motorcycle refinance

    Get your documents ready 

    The only documents you’ll need to provide are your drivers license, two most recent payslips and up to date bank statements (Driva can help you retrieve these digitally with help from our friends at bankstatements.com.au - read more here).

    Once you’ve decided on the loan that suits you best, Driva will make sure that you’re likely to be approved before sharing your profile with the lender. This protects your credit score, prevents disappointment and speeds up the process.

    Get your motorcycle loan approved!

    Depending on which lender you’re going with, the approval process normally takes between 2 hours and 2 days. After you’ve been approved, your prior loan will be completely paid off, so you’ll only need to worry about your new bike loan. 

    If you’re struggling to decide between lenders, or have any questions about the refinance process or motorcycle loans in general, our friendly and knowledgeable team are happy to help! 

    Give us a call on 1300 755 494 or email us at hello@driva.com.au.

    Maddie Barclay

    Maddie is the Marketing Coordinator at Driva and our resident blog writer on all things car finance. When she’s not discussing the ins and outs of vehicle loans, you can probably find her at the beach or spending time with family and friends. 

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