1. Build your Credit Score
2. Reduce your Current Borrowing / EMI Costs
Nowadays, owning a vehicle has become more of a necessity than an extravagance, as the cost of public transport is on the rise and traffic situations are getting worse in countries like India. In comparison to cars, a two-wheeler is more comfortable to maintain and offers less consumption of fuel. For buying a motorbike, if you are worried about the amount you need to spend, then don't worry! A two-wheeler loan is the solution. There are lots of leading banks in India that are offering two wheeler loans. Not only can you get the vehicle of your dreams through the loan, but you will also benefit from paying back the mortgage without any financial stress. In addition to that, you will get to know about a lot of two-wheeler loans that will assist you in saving a considerable amount on the loan value.
Always discuss the prevailing interest rates with your lender and check the affordability before applying for a two-wheeler loan. The interest rates play a significant role in making your credit expensive, so pay attention to every minute detail about the price of interest.
Two-wheeler loans come with a lot of features and benefits. Here are some of the advantages of two-wheeler loans offered in India:
As most of the banks provide loans up to 90% of the cost price of a two-wheeler, it makes the purchasing a lot easier.
Buying any vehicle by burning savings is not a good idea. Instead, paying affordable monthly installments from the salary reduces the burden and helps in managing the budget effectively.
Cost of insurance, accessories, and registration are usually covered in the two-wheeler loan.
Check for loan partnership options with your automobile dealer to get more out of your two-wheeler loan.
Another benefit of a two-wheeler loan is minimal documentation requirement. It is available to all sections and class of customers.
The income criteria are very open as most of the banks offer motorcycle loans even to people having a yearly income of Rs.50,000.
There is no prepayment penalty or any nominal foreclosure charge for the completion of the two-wheeler loan ahead of its tenure.
The banks also offer lenient repayment options which enable the customer to choose a comfortable duration for the payment.
The rate of interest on two-wheeler loans is different for every bank. Every bank has their pre-fixed parameters based on which the final price is determined. The interest rates are usually of the floating type and are based on MCLR (Marginal Cost of Funds Based Lending Rate). Since a two-wheeler is a depreciating asset, the interest rates generally remain higher when compared to other loan products.
Usually, the interest rates in India are between 8% to 18% in the two-wheeler loan segment, depending on the bank, the amount of credit, the scheme of loan, the repayment tenure, the type and vehicle model, the net income and type of employment of the applicant, the source of income, and credit history. The loan rates may also depend on the nature of the loan applied. Typically, banks offer two-wheeler loans in secured and unsecured forms. While the interest rate charged on a secured loan is relatively lesser, an unsecured loan comes with a higher interest rate.
Before beginning the search for a suitable loan with low-interest rates, multiple factors should be kept in mind, which play a significant role in deciding the interest rate of the loans. Here are some of them.
Kind of Vehicle: The rate of interest largely depends on the nature of the vehicle that the borrower is planning to buy. Whether the customer intends to purchase a moped, a scooter, a motorcycle, or a high-performance two-wheeler, the interest rate would be different for each.
Applicant's Employment Type: The employment nature of the applicant usually has a significant impact on the rate of interest, offered by the banks. A salaried individual is considered to be a more credible borrower in comparison to a self-employed individual, so the interest rate for the salaried borrowers would be lesser than the price offered to the self-employed individuals.
Income: As the income of the applicant calculates the ability to repay the loan in the form of EMIs every month, it dramatically affects the interest rate that is offered to the person. While an applicant with higher income range is usually provided a low-interest rate, an individual having a relatively lower income gets a loan with higher interest rate.
Eligibility: In India, most banks offer two-wheeler loans to people within the age group of 18 to 65. In that age range, either the applicant can be a student, a salaried professional, or a self-employed individual. Some selected banks also provide two-wheeler loan products specialized for agriculturists.
Documents: The applicants need to submit an ID and address proof. Income documents like bank account statements, salary slips, ITR statements, and certificate of employment are also required. Agriculturists and self-employed individuals also need to submit relevant supporting documents to avail a loan for a two-wheeler.
As the interest rate of your two-wheeler loan impacts the final amount that you need to pay every month as EMI, you need to take an informed and calculative decision. Read the information accurately, compare the loan products, and the interest rates before making the final call.