If you have been thinking about getting a bike for some time now, then you are well aware of the fact that the easiest way to finance your need is by availing a two-wheeler loan. However, with so many financial institutions offering these loans at various terms, it can be a daunting task to choose one. It is, after all, not enough to just go through various detailed offers and eligibility criteria, without understanding how they will impact you. Hence, knowing how to carry out a two wheeler loan comparison is important. And this article helps you to do just that.
What Is a Bike Loan?
One of the most important points you need to understand is the meaning of 2 wheeler loan, which is popularly known as a bike loan.
In simple terms, a bike loan is a financing instrument through which you, as the borrower, can borrow the amount required to purchase a bike or two-wheeler. Most two-wheeler loans in India offer upto 80 to 85% of the current on-road price of your vehicle and also come with competitive rates of interest, making them an attractive option among bike enthusiasts.
How to Compare Bike Loans?
Now that you know what exactly a 2 wheeler loan is, read on to know how you can compare the different bike financing options available in India.
ALSO READ: Follow These 7 Tips to Pick the Perfect Two-wheeler for Your Needs
Documentation Required
If you have researched any loan in the past, you are probably well aware of the fact that the documentation required is one of the most important areas of concern. So, make a careful note of the different documents that each lender requires in order to process your application.
For example, lender A might need your latest 6 months’ bank statement, while lender B might require your last 3 year's ITR return.
The Applicable Rate of Interest
After documentation, the second parameter you can use to compare loans from different lenders is the rate of interest each of them is charging. Generally, bike loans in India come with an interest rate in the range of 9.65% all the way up to 17% per annum, making this a good yardstick to stack the loan offers available to you.
While it is generally perceived that having a lower rate of interest means you will save more money in the long term, this is only partially true. Keep in mind that the lender is also trying to generate profit out of this deal, and so a lower rate of interest might come with some strings attached, and it is your duty as the borrower to find out what it is. Usually, a low interest rate is associated with a long tenure, and that means your loan burden will be greater in the long run. So, choose wisely.
ALSO READ: A Complete Guide To Choosing The Two-Wheeler Loan Tenure
Loan Amount on Offer
When you are planning to purchase a bike, one of the biggest hurdles that might come your way is gathering the total amount required. Most lenders in India generally offer between 80% and 85% of the current on-road price of the vehicle, and you need to pay the remaining amount to the dealer as a down payment.
Thus, you need to first choose the make and model of your bike, followed by the total amount required to close the deal, and then settle upon a lender who is offering your required loan amount. However, the bigger the down payment you make, the lesser will be your loan burden.
Repayment Tenure
Depending on the loan amount you request, the lender might offer repayment tenure in the bracket of 12 to 60 months. Please keep in mind that the longer the tenure of your loan, the higher will be the total interest amount that you have to pay in the long run. A short tenure will help you become debt-free quickly, on the other hand.
Hidden Charges
Although this is not very common, there are some lenders who are in famous for their hidden charges. And while this might look insignificant at the beginning, if you are not wary of the fine print in the loan contract, these hidden charges can cost you a lot of money in the long run. So, you should read the terms and conditions carefully before signing on the dotted line.
ALSO READ: Pay Attention To These 7 Factors While Taking A Bike Loan
Ending Lines
So, now you know how to go about the two wheeler comparison process. Just keep your need and financial ability in mind while comparing lenders and loan offers and then go with one that suits you best.
