Two-wheelers are very much in demand because they are affordable, economically cheaper to travel and also fast. That is why young and adult alike invest in a two-wheeler for their daily travel needs. Even though two-wheelers are not as expensive as cars, people might not always have sufficient funds needed to buy a bike. In such cases, two-wheeler loans help with the funding. These loans provide you with the finance required to buy a bike. The interest rate is affordable and you can easily buy a bike without waiting for your savings to accumulate. Though two-wheeler loans are easily available, there are some things which you should know before applying for a bike loan.
Here are the five main aspects of the loan which you should know –
The loan would come associated with an EMI
Every loan you avail needs repayment and bike loans are not different. After you avail a loan you would have to pay Equated Monthly Instalments (EMI) towards the loan. Before applying for the loan, you should first ensure that the EMIs are affordable. Don’t get carried away with the desire to own a bike. Work out the affordability of the potential EMIs before indulging in a bike loan. There are online EMI calculators which help you calculate the EMI before applying for the loan. Use the calculator to find the most affordable EMI.
Different loans have different interest rates
There are more than two dozen lenders who are willing to offer you a loan to buy a bike and each lender has a different loan interest rate. Before choosing a lender, comparison of different interest rates is a must. Since interest is an additional cost, you should find the lowest possible rate to save money. To find the lowest rate, comparison of different loans is a must. You should choose a lender only after comparison and ensure that the lender charges the lowest rate of interest on your loan.
There would be an eligibility criterion on the loan
To avail a bike loan you would have to fulfil some prescribed eligibility criteria. The criteria are specified by the lender. They include your age, income, occupation, work experience and credit score. Bike loans are available to individuals who are more than 18 years old, have an occupation and earn a minimum level of income per month. In case of credit score, a score of 650 and above is required by lenders. So, you should check the eligibility parameters of the lender from whom you are seeking the loan to ensure that you fulfil all the requirements.
Pre-payment facility might be available in the loan
Pre-paying the loan means paying a lump sum part of the loan or the entire loan before the stipulated tenure. Prepayment facility is allowed in almost all bike loans and it allows you to get rid of the debt faster. However, there might be terms and conditions associated with prepayment. Lenders might either charge a penalty on prepayment or the facility might be provided after a specified tenure. You should, therefore, find out the complete details of prepayment before selecting the loan.
The loan doesn’t pay for two-wheeler insurance premium
Two-wheeler insurance is a mandatory cover for all two-wheelers. That is why you often get the policy’s premium included in the bike cost when you buy a new bike. However, a bike loan doesn’t cover the two-wheeler insurance premium when financing the bike. A loan is available for a percentage of the bike’s cost and this percentage excludes bike insurance. If you get a loan for up to 90% of the cost of the bike, the remaining 10% and the bike insurance premium would have to be paid by you. You can use a bike insurance calculator to work out the premium payable for the policy and then arrange funds to pay the premium.
So, if you are eyeing a new bike, avail a loan to fund your purchase. While the loan would allow you to own your bike, don’t forget to buy and renew bike insurance policy as it is a must for using your new bike on Indian roads. A bike insurance calculator can help you in the same. Thus, even if you feel that it is an unnecessary expense, it is very important to renew bike insurance so as to ply your vehicle on the Indian roads legally.