A two-wheeler loan lets you purchase a bike or scooter of your choice with minimal documentation and simple eligibility criteria. Various lending institutions in India extend this credit facility to offer you with immediate financing while buying a two-wheeler. It may be confusing for you to select one lending institution among all other alternatives without knowing the parameters to compare them.
Factors to Check While Choosing a Two-wheeler Loan Offer
Following are the major parameters one must compare before accepting a bike loan offer:
- Rate of interest on offer
Affordability of loans needs to be one of the major concerns for selecting a two-wheeler loan. For this, you need to ensure that the applicable interest rate is affordable compared to other alternative lending agencies. This will keep your instalment amount under check, and you can manage repayment without stretching your finances.
Generally, age, income, credit score, etc., are some factors that lenders check before setting an interest rate. You need to compare the offers of various lending institutions and choose as per your suitability.
- Special two-wheeler loan offers
Major financial institutions extend special two-wheeler loan offers during the festival seasons. You can get advantages like a reduction in the interest rate, no processing fees, 100% financing, etc. In fact, certain lending institutions offer multiple additional privileges to existing borrowers.
Conduct proper market research if you are looking to grab such offers. It will reduce your applicable borrowing cost and make the loan more affordable.
- Flexibility in loan tenure
While selecting a financial institution, you also need to check whether it lets you choose a suitable tenure according to your loan repayment capacity. This way, the instalment can be easily payable.
In this regard, you need to be aware that a longer tenure increases the total interest outgo as the interest rate remains applicable for a longer duration. So, you need to choose a repayment period that fetches a manageable EMI while keeping the interest outgo in check.
You can utilise a bike loan EMI calculator to measure a befitting tenure. You just need to mention the brand/model/variant of your bike, down payment amount, tenure and the applicable interest rate. This will help you determine whether, at a selected tenure, the EMI is under your repayment capacity.
- Ease of applying
You must look for a lender who makes the application process easy and less time-consuming. Numerous reputed financial institutions offer online loan application facilities which simplifies the entire process of loan sanctioning and disbursement. Documents can also be submitted online via the official portal of such lenders. This reduces the hassles to physical visits of the lender’s branches and ultimately save precious time.
- Time taken for disbursal
You may choose a lender directly or choose to apply for two wheeler loan via the dealer who is selling the bike to you. Multiple lenders have tie-ups with dealers of two-wheelers, and you can choose one among them. However, check for the time taken by a lender to disburse the loan amount. Quicker the disbursement, earlier will be the delivery of bike.
- Compare the borrowing cost across lenders
Apart from the interest rates, a two-wheeler loan includes several other fees that increase the overall borrowing cost. For example, you need to bear the processing fees and documentation charges while obtaining the credit facility to purchase your bike.
Lending institutions may also include pre-payment/foreclosure charges, bounce charges, etc. Since all these increase your cost of borrowing, you need to compare several lenders and select one that comes with lower additional charges.
While opting for a two-wheeler loan to purchase your new bike, you need to choose a financial institution that will benefit you in the long term and does not mandate meeting a stringent eligibility criteria. The lender you select must offer terms and conditions that keep your borrowing cost down to minimum. Following the strategies mentioned above, you can select the most advantageous loan offers among the many alternatives that the Indian lending market has on offer.