Everyday, people are always out and about, be it for work or for pleasure. People always move and transport from places to places. Transportation like car and motorbike has become a necessity. A decision to buy a vechile, be it a car or a motorbike can be influenced by various factor like cost, comfort, preference and maintainance.
With the cost of owning a car in Malaysia is rapidly increasing, many people has turned to buying a motorbike as an option; be it via motorcycle loan or cash. Eventhough some people can still afford to buy used car, it is still a huge monthly commitment that people have to payback.
The process of buying a motorcycle surely is brief compared to te process of buying and owning a used car or a brand new car. Not only that transporting using a motorbike have a lot of time, but it also help save the maintainance cost, gas, as well as insurance cost as it is a lot cheaper. Compared to car’s monthly instalment, you can buy a motorbike with an instalment as low as RM100 per month, depending on the payment type.
There are two types of payment that you can choose from, which are via motorcycle loan or full on cash by making a personal loan. Hence, it is not an unfamiliar scene to see people getting a personal loan to purchase a used motorbike with high capacity like superbike as they sucessfully obtain an affordable monthly instalment.
Here, we will help you compare which type of motorbike purchase type is more suitable for you, Motorcycle loan vs full cash (personal loan)
Process of Hire Purchase Loan- Motorcycle Loan
Nevertheless, every prudent consumer would ponder the same question:
Hire Purchase Financing
The conventional financing mode for motorcycle purchase is via motorbike loan due to its lease-to-own scheme. Consumers are able to utilise the vehicle while paying installments, although they do not gain ownership until the full amount has been paid. Interest (or profit rates under Islamic banking) and tenures may differ depending on the type of motorcycle purchased.
Despite that, This financing mode will charge high interest rate (or better known as profit rate) in islamic banking like personal and koperasi loan, and the pay back period depends on the type of motorbike that you want. Normally, customer are more fond of motorcycle loan purchase from supplier as they will be offered cheap instalment, with a long payback period. Theres are aslo some customers that would prefer a shorter period of payback as it is faster.
One of the most favoured motorcycle loan is AEON Credit Motorbike loan when it comes to buying motorbike. This is because most of motorcycle shop in malaysia provide motorcyle loan using AEON credit. This hire purchase motorcycle loan makes everything easier for the borrower to get the motorbike that they desire as AEON is a syariah compliance and lenient passing criteria. The rate that is offered are also affordable.
Below is a typical financing package offered under the AEON Credit Motorbike loan (the information disclosed is accurate during the period it was written).
| Type of Motorcycle | Interest/Profit Rate Monthly | Maximum Tenure | Margin of Finance |
| Moped | From 0.83% | Up to 60 months | Up to 90% |
| Superbike (under 500 cc) | From 0.59% | Up to 84 months | Up to 90% |
| Superbike (above 500cc) | From 0.40% | Up to 84 months | Up to 90% |
Personal Financing – Alternative of Motorcycle Loan?
Meanwhile, an alternative financing channel for your motorcycle purchase is through personal loan, whereby consumers borrow the required funds from financial institutions and pay installments for the personal loan instead.
Advantages of Personal Loan
- Full ownership of the motorcycle (purchased through cash from dealer)
- Longer maximum tenure can be up to 120 months
- Lower monthly installments (loan distributed over a longer period of time)
Nevertheless, a caveat of personal loan financing is its dependency on the consumer’s personal credit history like CCRIS & CTOS and loan eligibility. Applicants opting for personal financing are subjected to credit checks and stringent requirements, in addition to a potentially long wait for funds.
For example, Co-op Bank Pertama offers a personal loan with a promotional interest rate as low as 2.31% (for financing up to 3 years) and 2.67% (4-10 years).
Comparing Motorcycle Loan vs Personal Loan
Here we use 2 examples – a new 250cc bike and another new 650cc superbike using motorbike financing (from AEON Credit) and personal financing (from Co-op Bank Pertama) to compare which one is more worth it and cheaper.
Example 1: Purchasing a 250cc Honda CBR250RR Motorcycle (2021) at RM25,999
| Motorbike Loan | Personal Loan | |
| Monthly Profit Rate | 0.83% | 0.22%** |
| Tenure | 60 months | 60 months |
| Interest Payable (RM) | 25,999 x 0.83% x 60 = 12,948 | 25,999 x 0.22% x 60 = 3,432 |
| Interest Savings (RM) | 12,948 – 3,432 = 9,516 | |
| Total Payable (RM) | 25,999 + 12,948 = 38,947 | 25,999 + 3,432 = 29,431 |
| Monthly Instalment (RM) | 38,947/60 = 649 | 29,431/60 = 491 |
**This is an estimation of the monthly profit rate. The promotional rate is between 0.22- 0.25% and the approved rate would depend on the credit profile and history of the borrower.
Personal loan is cheaper – In this case, the consumer saves RM9,516 by financing the purchase of this bike through a personal loan and the monthly installment is also close to RM158 lower per month by using a personal loan.
Example 2: Purchasing a 650cc Honda CB650R Motorcycle (2021) at RM43,499
| Motorbike Loan | Personal Loan | |
| Monthly Profit Rate | 0.40% | 0.22%** |
| Tenure | 84 months | 84 months |
| Interest Payable (RM) | 43,499 x 0.40% x 84 = 14,616 | 43,499 x 0.22% x 84 = 9,039 |
| Interest Savings (RM) | 14,616 – 8,039 = 6,577 | |
| Total Payable (RM) | 43,499 + 14,616 = 58,115 | 43,499 + 8,039 = 51,538 |
| Monthly Instalment (RM) | 58,115/84 = 692 | 51538/84 = 614 |
**This is an estimation of the monthly profit rate. The promotional rate is between 0.22 – 0.25% and the approved rate would depend on the credit profile and history of the borrower.
Personal Loan is cheaper – In this case, the customer saves RM6,577 by financing the purchase of this motorcycle with a personal loan, and the monthly installment is about RM 78 lower per month by using a personal loan.
Conclusion
Is personal loan a better option to finance your motorcycle purchase in Malaysia? It might be, from the perspective of a lower monthly repayment. The answer will also depend on your own credit profile and your access to credit. As a smart consumer, you should assess all possible options before deciding on the facility that suits your financing needs. Try exploring different personal financing options. It might be well worth the time.
This article is written by Direct Lending – An online personal lending platform that provides bank and koperasi personal loan as well as licensed moneylenders personal loan. We can help you find, compare and apply personal loan that best suits your financial needs. Check your eligibility for free, no upfront payment or processing fees and get a loan rates from 2.31% p.a. or 2 working days.
(This article was originally published on the 13th of February 2018 and updated on the 5th of October 2022).
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