Are you a person in need of a two-wheeler but can't buy one due to budget constraints? Don't worry, we have the right solution for you: bike loan or two-wheeler loan. A two-wheeler loan can be quickly paid through equated monthly installments (EMIs). Whether you buy a 200cc scooter or a 500 cc bike with a two-wheeler loan, it can be obtained from banks and non-banking financial corporations at affordable prices. An applicant gets the option of choosing the interest rate for the loan as per their convenience. There are various official bank websites and third-party portals that give precise information about the credit, offers, and the application process. So, before zeroing in on a bank, research on the sites and understand the process.
The Two-Wheeler Industry in India
In a country like India, bikes are trendy as they help people in commuting quickly amidst traffic jams. Considering the fact that nowadays nuclear families are in vogue, bikes are more preferred due to convenience and economical usage. Another reason for the increase in bike buyers and riders is the majority of the young population, among which the youth between 18-25 years, prefers bikes due to their passion and swag. In India, the two-wheeler industry is said to be one of the largest of its kind across the globe. Other significant reasons for the rise in two-wheeler purchase is that they are readily available to Indians and many banks and NBFCs provide cost-efficient two-wheeler loans.
Additional Interesting Facts About Two-Wheelers in India
Some of the top two-wheeler companies in India that offer bikes and scooters include Bajaj Auto, Yamaha, Hero Motocorp, TVS Motor, Honda Motorcycle & Scooter India (HMSI), Royal Enfield, etc. The Indian market also contains bikes made by foreign bike manufacturers.
Some of the best-selling bikes of the year 2017 were Aprilia SR 150, Honda Dio, Honda Activa 4G, Hero Glamour 2017, TVS Apache RTR 160, etc.
The next generation of bikes in India will mainly consist of electric two-wheelers, which will run on electricity rather than petrol. The country has already seen a fantastic start of electric bikes being introduced by Electrotherm and Hero Electric. There are a few other companies which are working towards the development and release of electric scooters. It includes Yamaha, Bajaj Auto, Mahindra Two Wheelers, and TVS Motor. These bikes will use lithium-ion (Li-ion) batteries to operate. Ather Energy is another company which will release its first electric scooter in India by the name, Ather S340.
Besides Indian manufacturers, there are foreign bike manufacturers too, who are interested in selling their vehicles in the market of India. Some of the different bike manufacturers who are already selling their cars in India include Harley Davidson, Suzuki, Ducati, and UM Bikes.
Why Choose a Two-Wheeler Loan?
Considering the increasing number of private cars in the urban regions of India, the rural area transportation may be judged by similar trends. But the fact is that the majority of the rural demographics can afford a two-wheeler, mainly due to convenient access to bike loans and infrastructure. So, once the loan repayments for the old two-wheeler are made, you can think of buying a new vehicle. Though lots of people in India can buy an entry-level vehicle without any loan, it may cause much distress, regarding finances for the family. Also, that amount could be used for making investments such as mutual funds, fixed deposits or just for buying two-wheeler Insurance. In other words, purchasing a two-wheeled vehicle with a loan can reduce the burden of buying it with the whole amount in a single month.
Majority of the population fall under the bracket of availing the facility of completing payments through EMIs, which is another reason behind choosing the loan. Two-wheelers have much lower maintenance costs in comparison to four-wheelers, and the mileage or fuel consumption is better in the former.
The Indian credit market provides several options in the form of banks with competitive interest rates. They even offer the combos for loans and insurance packages, and sometimes come with the advantage of paying through post-dated cheques.
Kinds of Bike Loans
There are two types of two-wheeler loans available in India, based on the access of the credit:
Secured bike loans: These loans are generally taken against a safety or collateral, which may be an asset, such as bonds, land, and home, etc. Though these loans are readily available and have comparatively lower interest rates than unsecured loans, they also come with the risk of losing the asset, in case you are unable to pay off your loan amount successfully.
Unsecured bike loans: For this loan, no collaterals are required for sanction. But the con is that it makes you pay a much higher price for your vehicle than you would have paid in a secured loan. For the first-time buyers or the people who don't want to take the risk of mortgaging the asset, it is a better option. However, given the choice, people should decide upon a loan according to their priorities.
How to Get Two-Wheeler Loans?
There are two methods to apply for a two wheeler loan - online and offline.
For applying online, either visit the official website of lenders who offer these loans or visit the third-party financial sites. Once you visit these websites, you will get details about interest rates, fees, charges, and EMI options associated with each loan. Compare each feature of different credits and then decide accordingly. You can also determine your loan tenure and loan amount by making comparisons online.
Also, don't forget to utilize an online loan EMI calculator, which is available on both kinds of websites. On the EMI Calculator, you can check different loan amounts, loan tenures, and interest rates. After getting the results for the details, you enter, fix your loan tenure and loan amount.
Submit the required documents online by uploading them to the website after checking the list of documents from the site before applying.
Applying online is convenient as it can be done from anywhere without visiting the branch physically.
Online application reduces overall loan expenses.
Most lenders also provide doorstep delivery of loans when you apply online.
Visit the nearest bank branch or NBFC that you are interested in applying for an offline two-wheeler loan.
At the branch, ask for a customer care representative to guide you while applying for the two-wheeler loan by telling him or her about your preferences and financial condition.
Finish all the documentation to get the loan amount disbursed to your account.
However, remember that:
For offline application, online loan EMI calculators will not be of much use.
You will not get to compare the several two-wheeler loan options available in the financial market.
Applying offline also means that you may face a crowd due to which you may have to stand in queue to get the support of a bank representative.
Interest Rates of Two-Wheeler Loan
The interest rates of two-wheeler loans are variable, depending upon the lender as well as other factors such as loan tenure, credit report, and the vehicle that you have decided to buy. The rates generally vary between 11% to 18.25% p.a. Besides the interest rate, there may be a processing fee and other hidden charges which you need to check to calculate the total expenses of your loan. You can even get the chance to negotiate the interest rate with your lender through a good credit score.
Loan Fees of Two-Wheeler Loans
While applying for a two-wheeler loan, consider the fees associated with it which can't be ignored. The price of the credit will not give the right idea about the expenses of the loan. So, along with the interest rate, compare the charges for each loan too, which will help you in choosing the right bike loan. Below are some of the charging fees which one needs to pay under certain conditions:
Processing fees: These are charged for processing the request for the loan, and for most of the banks it's mandatory. Processing fees are generally calculated in percentages of the total loan amount and are non-refundable under any circumstances. The amount charged for this fee differs from bank to bank, but this fee should not be ignored as it may result in paying off the excess amount.
Prepayment fees: These are charged in circumstances where people pay the payments earlier than due time or sometimes even end up in paying the remaining loan amount before tenure. This charge generally remains less in amount and sometimes even non-existent for bike loans.
Late-payment fees: This fee can be easily avoided, with a little bit of planning. The borrower is generally charged for this when he/she doesn't pay the amount on time due to lack of funds or any financial crisis. However, banks charge this fee irrespective of the circumstances.
Conversion charges: This fee is charged when the borrower changes the two-wheeler loan from a floating rate to a fixed rate calculation or vice versa. It is charged for switching, on the basis of requirements. In other words, it is a flexibility fee.
Copy of an account statement: Sometimes people may require a report for checking their current state for the loan. Though most of the banks don't charge for giving a copy of an account statement, there may be a few banks which may impose a nominal charge for a hard copy of the same.
Administrative fee: This fee is different from the processing charges. It takes care of the administrative cost to the bank for processing the loan.
6 Tips to Remember Before Applying for a Bike Loan
Before deciding upon a bike loan, mentioned below are some of the points that you need to keep in mind:
Achieve a Good Credit Report: Starting from the credit score to the last mobile postpaid bill payment, make amends in your credit history if you want to get a two-wheeler loan at reasonable interest rates.
Research for the best offer: Compare the fees for each product along with the interest rates and check the features and benefits of the loan too before deciding.
Check the product disclosure sheet, terms and conditions on the brochure: Before applying for a loan, one of the major points is to check the terms of the loan along with proper product details. Contact the bank immediately for clarification, in case you are unsure of any written information or if you find anything misleading.
Analyze the rates of interest: To get an approximate idea of how much amount you need to pay, use a two-wheeler loan EMI calculator. Also try to check other information such as a fixed or floating rate, different base rates, etc. Please note that every bank has a different way of calculation with different numbers, which needs to be well understood.
Fees: Don't ignore the charges just because you see a pleasing rate of interest for your two-wheeler loan.
Documentation: Keep all the documentation ready once you get sure about a loan product, so that you can instantly apply online or offline.
1. Should I visit the bank to get a two-wheeler loan?
No, it depends on the fact whether you are applying online or offline. In case of a dealership, the showroom will take care of the process related to the loan. Sometimes the representative from the bank may be available in the showroom. Another option is to apply online. Though some loans may require soft copies of documentation, others will send a bank representative to discuss the product in detail and collect the documentation.
2. When do I know that it is the right time to apply for a two-wheeler loan?
The moment when you will finalize the bike, make a calculation that whether you want to pay the amount at once or you can afford to pay it through monthly installments which can be managed from the monthly salary.
3. Will the whole amount be paid by the bank in two-wheeler loan?
The banks offer loans at different margins. While some may extend only 80% margin, some banks may get you 90% covered as well. It is essential to note that most of the top banks will provide you with the full amount of the vehicle, along with other expenses such as insurance and accessories.
4. Is it mandatory to take personal accident insurance when riding a two-wheeler?
Absolutely yes, since riding a two-wheeler has a lot of risk against riding a closed four-wheeler.