Motorbike Loans - Jargon Buster

To start with, there's nothing magical about these names. If you've no property to provide the lender with security then it is that much harder to obtain an unsecured (or personal) loan. Even if you're a "good risk" from the lender's point of view, the interest rate will still be much higher than with a secured one.

Secured loans are exactly what they say - secured on your property - usually your house. This is when people often get emotional, letting their emotions rule their heads. "Suppose I can't pay? I might lose my home - much better that I go for an unsecured loan - even if the interest is twice as much". "But what happens if I can't pay then? - I can be made bankrupt". So what is worse - having to downsize on the house a little or being made bankrupt!? Add to that, the fact that house prices are increasing and the case for secured loans can be made out over and above unsecured ones. We rest our case.

You have doubtless realised that lenders quote in APR terms. Why and what does it really mean? What the APR system is supposed to do is to provide a level playing field so that you can compare one lender with another. The APR is supposed to take into account not only the lenders profits - but the overheads - loan fees, insurance, documentation etc.

Unfortunately every lender interprets what should be Included in a different way. Result - an uneven playing field.

Our suggestion is that you ask your potential lenders to provide a "good faith estimate" showing the exact and individual figures and lending - show you exactly what you are bargaining for - including any hidden extras.

These are final loan payments - usually significantly larger than the instalments. For example when you buy a vehicle the credit company may allow you to pay in instalments and then after a period to make a large lump sum payment to secure the vehicle as your own.

Any potential lender worth his salt will want to check out your credit rating.

But you can do this yourself - Equifax Plc and Experian provide this service for a small fee:-

To a point, the consumer credit legislation:-

1. Offers a cooling off period.
2. Supervises up to £25,000 for secured loans - although from April 2008 the upper limit is abolished under the Consumer Credit Act 2006. This in turn raises issues of "dual registration" of normal mortgages which may fall both under the consumer credit legislation and also the financial services legislation.

Sadly accidents, redundancies and sickness do occur from time to time. Distressing in themselves - but all the more so if you are borrowing money. So how can you protect yourself? The clear answer is summarised in one word - INSURANCE. Just as you should never get on your bike without it, never enter into a loan without it - and just as bike insurers premiums vary enormously, so they do for loan repayments. YOU ARE NOT OBLIGED TO TAKE THE COVER OFFERED BY YOUR LENDER - SHOP AROUND! There has been criticism in the press relating to such policies.

• CAB (Citizen's Advice Bureau)
• Bikers' Advice's own appointed consumer solicitor Daniel Wise. Daniel is one of the most clued up people we know. His services are not free - but not expensive for that competence and peace of mind. Contact Daniel Wise by calling 0808 1000 741 or through our contact form

Maybe not a lot - and (dare we say it) should you really be thinking of a loan in those circumstances?

But if your ailing Uncle Sammy is about to leave you a couple of £Million, you might be able to swing it - but why not wait that bit longer.

If you must, as always, shop around.