A guide to getting a motorcycle loan in Singapore

PHOTO: Lianhe Zhaobao

Just like buying a car, paying the full amount for a motorcycle may not be the best option. You could instead take up a bike loan. This guide will show you how to take up a motorcycle loan in Singapore.

Motorcycle loans, like car loans, are meant to help you pay for your bike by borrowing money from a lender, usually a large sum of money. You will then have to pay back the loan in fixed instalments throughout your loan tenure.

The usual length of motorcycle loans ranges between 36 to 60 months depending on your agreement with the lender. You can also calculate how long you wish to take up the loan for by checking a Motorcycle Loan Calculator.

What is a motorcycle loan calculator?

A loan calculator allows you to check if you can afford a bike based on your current financial situation. You will be able to adjust the loan duration, monthly instalment amount, and some will even let you see the amount payable with interest added.

Do note that the amount provided when you use the motorcycle loan calculator is an estimate, as there are other factors that might affect your loan amount. For example, your bank will take into account your credit score and eligibility before approving your loan.

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What are the types of loans for motorcycles?

1. Traditional motorcycle loan

Motorcycle loans are provided by specific banks, meaning you have to find them because it's rather tricky to find this type of loan. Why? Because banks or lenders are not inclined to approve auto loans for motorcycles.

This is because of the high risk of injury, even death, that comes with riding a motorbike. Should something unforeseen happen, lenders are afraid that the loanee will default their loans, which in turn will turn into bad debts.

2. Personal loan

If you can’t get a motorcycle loan, what’s your next option? Well, that would be to take a personal loan from a bank. Personal loans can be used for almost anything. The application process for the loan takes a few days and will require proper documentation.

Your bank will also run a credit check to determine how reliable you are in paying the money back. As long as you have a decent credit score, securing a low-interest rate from a bank is very likely. Ensure you look around and see which bank provides the best interest rate.

3. What other options do I have to get a loan?

In-house financing from motorcycle dealerships

If you were to purchase a motorcycle from a dealer, they might offer their in-house financing options. In hopes to win you over, they will entice you with competitive interest rates, but in-house financing is usually more expensive than a bank.

On the other hand, they have more incentives to offer. A rule of thumb is to compare the prices you get from other options before agreeing to anything because you may never know if there may be other additional fees in the loan contract.

P2P lending

This option is suitable for those that do not have a credit card nor a bank account to apply for a traditional loan. Peer to peer (P2P) lending is essentially sites that bring individuals who need to borrow money to investors who lend unsecured loans.

Note that people are regulating and managing this form of borrowing because it cuts down formal financial institutions like banks. It is good to keep in mind that this is also a possible alternative for you.

What to avoid when purchasing your motorcycle?

If you do not have sufficient financial resources, avoid using your credit card to make the purchase. Even if you skip the loan process and credit check, you would still have to pay your credit card bill.

Do not miss it because credit cards have high-interest rates and penalties for late payments. Ignoring a credit card payment after you maxed out your credit card for a vehicle will lead to a downward spiral. The repercussions would eventually cause your credit score to drop as well.

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Also, never make the mistake of using your house as collateral for the motorcycle loan. Risking your own home for a two-wheeler or any other vehicle is the worst trade of all time (if you got the reference). Consider anything else like future paychecks, stocks, other personal investments as collateral instead.

Lastly, taking up a motorcycle loan is rather complex, and it involves a lot of careful planning and understanding of your financial situation. Always buy within your means and if you can’t afford a motorcycle at the moment, despite it being convenient for you or a lifelong dream to own one. Save up and wait for a little more.

It’s better to do so than getting caught up with late payments on a motorcycle loan should you take one. We hope this guide helps you make an informed decision and gives you better insight into motorcycle loans and financing options.

This article was first published in Motorist.