Buying a motorbike is the most affordable and fastest way to get around in Malaysia, especially if you live and work in one of our busy cities. With many of us now working as delivery riders, you might be thinking of getting a motorbike, too. Motorbikes can help you save on fuel, toll charges, roadtax and insurance.
But if you’re fresh in the workforce or are a gig worker, paying cash for a motorbike that costs at least RM4,000 isn’t the easiest thing to do.
So, you would probably take a loan to buy a motorbike. But what’s the best type of loan to take?
Malaysian banks usually only provide financing if you’re buying a bigger bike which would cost more. For a more standard bike, there are two types of loans you could consider:
- Hire purchase agreements
You could get into a hire purchase agreement with the company you want to buy the motorbike from or you could get one from financing companies like Aeon Credit Service. In most cases, interest rates start at 10% per year (or 0.83% per month). While that may seem low, hire purchase agreements usually use flat interest rate loans. The effective interest rate for a loan of 10% per year is actually 19%! Click here to use our calculator to calculate the Effective Interest Rate for yourself. Depending on where you take a hire purchase agreement from, the minimum down payment would range from 10%-20% and the loan period could be between one and seven years.To be eligible for a loan, you would usually be required to meet a minimum salary requirement which they will verify by asking for your payslips and bank statements.And remember, when you take a hire purchase agreement, the company you’ve taken the loan from will own the bike until you’ve paid off your loan.
- Personal loans
You could get a personal loan to pay off your bike. With a personal loan, you will be the owner of the bike from the time you purchase it. Personal loans usually have interest rates ranging from 6.88% – 7.92% per year and you could usually take a loan for up to 10 years. This is longer than the repayment period allowed under motorbike hire purchase agreements. But as we’ve said before, a longer loan will mean more interest costs. Use this personal loan calculator to calculate how much you will have to pay in interest.While personal loans seem to have lower interest, you’ll have to meet the requirements like a minimum monthly salary of RM3,000. The bank you’re getting a loan from will also check your credit score before deciding whether to give you the loan.
So, what do you do before buying a bike?
- Check your budget
Check your budget to see how much you can afford to set aside for a down payment and your monthly repayments. If you’re buying a bike as your main mode of transport, see if you can cut down other expenses that are less important so you can fit the motorbike into your budget.
- Choose a bike that fits your budget
Once you know how much you can afford a month, choose a bike that fits your budget. Here’s a tip, try to pay more for your down payment and take a shorter loan period. By paying more you will only have to take a smaller loan meaning you will be owing less money. By taking a shorter loan, you will pay less in interest. Use our vehicle loan calculator to calculate it for yourself or read our guide to understand how the length of your loans affects the interest you pay.
- Compare a few different loans before deciding
After you’ve selected your bike, compare between hire purchase loans and personal loans to see which one is cheaper before deciding which loan to take. Generally, your loans are affected by three things: the interest rate, down payment, and duration of your loan. Use our vehicle loan comparison calculator to help you compare your loans.
Always make a comparison of your loans before deciding which loan to take. And no matter how you choose to pay for your motorbike, make sure you can afford the monthly repayments and pay on time!