With the rising congestion on roads, two-wheelers have been a go-to mode for commuting for millions of Indians. This is the reason why two-wheeler sales in India have been constant, and the pandemic only affected sales marginally.
However, if you lack the funds needed to purchase a two-wheeler, bike loans can be of great help. Bike loans are very easy to apply for and are available at attractive interest rates.
So, read on to know more about bike loans and how you can choose the one that is right for you.
What is a Bike Loan?
A bike loan or a two wheeler loan is a financial facility that allows you to get financing to purchase a two-wheeler. These loans are secured loans that you can avail of by pledging the same bike as collateral.
To be eligible to take a bike loan, you must be between 21 and 65 years of age and have a minimum annual income as required by the lender.
Things to Know Before Applying for a Bike Loan
Choosing the right bike loan is important as you would not want to pay extra than what you need to. Hence, when choosing a bike loan, do thorough research and consider the following:
- Look for the best possible two-wheeler loan interest rates
- Try to choose a lender that charges minimum fees
- Choose a lender that offers a flexible repayment scheme
How to Choose the Best Two-Wheeler Loan
If you have decided to buy a bike, a two-wheeler loan may provide you with the required funding. However, it is important to find the right loan as you would not want to pay extra towards its processing or repayment.
The following are some of the tips that you must employ when choosing the right lending option for you.
1. Research on the Lender
When you choose a lender for a bike loan, it is important to consider several factors like processing fees, pre-payment and foreclosure charges, repayment schedule, etc. So, it is important to carry out a thorough search when choosing a lender.
You must also check the reputation of the lender, which can be found in customer reviews. Moreover, also verify that the lender is recognised by the Reserve Bank of India. You must also check with other borrowers if the lender adds any hidden clauses in the loan agreement.
In addition, if you have any queries regarding the lender or the lending policy, you can contact the loan executives to get them resolved.
2. Compare the Interest Rates
The two-wheeler loan interest rates offered determine the EMI amount you will have to pay every month to service your bike loan. However, interest rates depend on a variety of factors like your employment status, income and ability to repay.
If you have a good credit score, you can always negotiate the two-wheeler loan interest rates. When choosing between different loan options, go with the loan that offers competitive rates. This is because lower interest rates translate into more savings.
You can also use a two-wheeler loan EMI calculator to zero in on the lending option that offers a low rate of interest.
3. Opt for the Right Loan Amount
When opting for a bike loan, it is equally important to get the right loan amount. However, the bike loan amount depends on two factors:
- Your eligibility to avail of the loan
- The price of the two-wheeler you wish to purchase
Most lenders offer a bike loan amount corresponding to 80%-90% loan-to-value (LTV). That is why, remember to check your eligibility and credit score before applying for a bike loan. Fulfilling eligibility requirements and having a high credit score not just increases the chances of getting the loan approved, but also ensures a higher LTV.
4. Check for Special Offers
To attract customers and enhance credit growth, most lenders offer special offers on bike loans. Such offers are mostly available during the festival season. These special offers may include:
- 100% financing
- Zero processing fees
- Lower two-wheeler interest rates
- Free insurance
- Zero down payment
5. Have a Clear Repayment Plan
Even before applying for a loan, it is advisable to have your repayment plan in place. You can also use a two-wheeler loan EMI calculator to get the amortisation schedule. Having a repayment plan ready helps in structuring your budget accordingly.
Moreover, if your financial capabilities allow it, avoid having a long repayment tenure. This is because you have to pay more money as interest if you choose a longer term.
You can also reduce your repayment tenure by paying a higher down payment. In addition, you can also opt for flexible EMIs in order to make the repayment of loans easier and hassle-free.
In conclusion, if you wish to purchase a bike but lack the required funds, availing a bike loan can help you with it. However, choosing the right bike loan is important for you to save on paying excess in terms of interest charges or other fees.
So, before applying for a bike loan, conduct your research on the lender and lending options. Moreover, it would be best to look for a bike loan that offers the most competitive two wheeler loan interest rates.
By opting for lower interest rates, you can save a considerable amount on your interest payments. Equally important is choosing the right repayment tenure and loan amount. So, consider these factors as well when finalising a bike loan.