While applying for a personal loan, you can enjoy the benefits of having an unsecured loan which indicates that you do not have to furnish any collateral or security for borrowing loan. Moreover, the interest rates levied for personal loans are pretty reasonable. Hence, the overall loan expenditure for buying a bike will be low with a personal loan. Through proper financial planning, you can be assured of managing other monthly expenses along with borrowing credit. The prominent USP of a personal loan is that the borrower does not need to specify to the bank what is the purpose of taking the loan.
Whether a person is interested in buying a premium bike or gearless scooter or an adventure bike, he or she can apply for a personal loan to buy it. Also, if an applicant wants to purchase a used two-wheeler, he or she is eligible to take a personal credit unlike the case of a two-wheeler loan.
Apart from the unique features of a personal loan mentioned above, here are some of the strong reasons behind going for a personal loan to buy a two-wheeler.
1. 100% credit for on-road cost: With a personal loan to get a new two-wheeler, one can enjoy the leverage of 100% financing of the on-road price of the vehicle. Bute in the case of a two-wheeler loan, most of the banks offer only up to 85% of credit quantum, and the rest is paid by the applicant in the form of downpayment.
2. One can take the personal loan even without having a credit history: Generally, people purchase their first bike right after college or after their first job. During that time, one may not have any credit history as the person would have neither applied for credit card nor an educational loan. In case of a two-wheeler loan, most banks would undoubtedly ask for credit history details or a credit score, without which, you will not be eligible for a bike loan even if you satisfy the income criteria. However, in personal loan applications, there is a higher probability that if the bank is satisfied with the verification of the financial profile of applicant and convinced that the person will be able to repay the personal loan on time, then the loan application will be accepted.
3. Hypothecation of two-wheeler is not required: For a two-wheeler loan to purchase a bike, the bike will be hypothecated in case of a payment default - which means that one will have to transfer the ownership of the new bike to the bank or the NBFC in case one fails to repay the loan. Once the repayment is made from the borrower’s side, the claim of the bike ownership will be transferred back to the bike's owner. Hypothecation of the bike is a cumbersome process, as the applicant will be required to go through a tedious documentation process at the RTO. It will take an ample amount of time for the applicant to get the loan. Even after the completion of loan repayment, the borrower will mandatorily have to get a no-objection certificate (NOC) from the bank. The charges of NOC are costly. That's why the process of getting a personal loan is hassle-free as the borrower doesn't need to spend extra time and money. Also in a personal loan, the borrower will only be required to pay a processing fee, which is usually up to 2% of the amount of personal loan. The processing fee may differ from lender to lender.
4. Low rates of Interest: If the applicant is applying for a personal loan to buy a two-wheeler, the rate of interest will be typically less as compared to a two-wheeler loan. The interest rates for a personal loan generally start at 10.85% while the rate of interest for two-wheeler loans usually starts from 11% to 12%. The income of the applicant determines the interest rate for the bike loan, loan amount required, and loan tenure, which is not applicable to personal loans.
5. Straightforward eligibility criteria for personal loans: The eligibility criteria for the personal loan is simplistic in comparison to two-wheeler loans. For a bike loan, the minimum income criterion is quite higher.
6. Smaller tenures for personal loans: In a personal loan, one can enjoy smaller mandates. The tenures for personal loans usually range from 6 months to 5 years. One can easily choose a shorter duration for repayment of the loan and can clear the whole amount without paying much interest.
It makes sense to apply for a personal loan to finance your two-wheeler as compared to a two-wheeler loan. Doing so is simple, cheaper and time-effective. You can check how to apply for a personal loan by going through the personal loan section in mymoneykarma.