5 TIPS TO PAY YOUR BIKE LOAN EASILY

Introduction

In India, two-wheelers are extremely popular and there are not just one or two reasons for that. They are used by people across age, gender, social status across the country because bikes save time in travelling by helping you to get through the traffic. Though bikes are much cheaper than cars, not many can afford to pay the whole price at one go and thus, opt for a two-wheeler loan. There are many advantages to buying a bike via a loan, but everyone wants to be debt-free ASAP. Full repayment of any loan faster lessens the burden on finances. If you are wondering how to pay off your two-wheeler loan easily, well, we will discuss here a few simple steps to help you achieve that.  

The basics of a bike loan

Before we jump to steps of easy repayment, here are a few basic things you should know about bike loans.

• Two-wheeler hypothecation:

Two-wheeler loans are secured loans, which means the vehicle becomes the collateral and remains mortgaged throughout the loan tenure. If the borrower defaults on the payment, the lender has the right to seize the vehicle and sell it to recover the money. So, the bike owner must terminate the hypothecation bond and inform the RTO to get the bike in his/her name after full repayment.

• Flexible tenure option and little down payment:

Not only bike loans are extremely affordable, the tenure of the loans usually vary between 6 to 60 months giving you the choice to pick the tenure according to your repayment capacity. You can also choose between fixed and floating type of interest rate. Since lenders offer up to 90% of the bike’s market value as a loan, the applicant just needs to make a down payment of merely 10%.

• Own bike of your choice:

Two-wheeler loans are available for regular bikes, sports and luxury bikes from different brands and so, you are free to pick what you want.

• Relieves financial burden:

The borrower may have other obligations like life insurance premiums, home rents, miscellaneous bills, etc. that can cause financial concerns if other debts burn a hole in his pocket. But with easy EMIs on a bike loan, he/she is unlikely to feel any financial burden.

• Improves credit score:

Since the EMIs are pretty low in the two-wheeler loan, there are negligible chances of defaulting. Once, fully paid, it reflects positively in the credit history, making future loan approvals easy and quick with better terms.      

• Eligibility and documentation:

You can get the two-wheeler loan if you are an Indian citizen above 18 years, have a steady source of income and can provide documents of identity, address, and salary proofs.

Tips to Pay Off Bike Loan

1. Use surplus money:

Sometimes, we receive money when we don’t really expect them like a fixed deposit getting matured, or a friend settling an old debt or employer doling out a handsome bonus. Such surplus amount must be used in repaying the loan instead of going on a shopping spree. You can also do a part-time job to earn enough to pay-off monthly EMIs. 

2. Make prepayment:

Though financial institutions can charge a penalty on prepayment, most lenders don’t mind one or two extra instalments per year. So, make use of that. In case, you are in a position to completely settle the loan, make sure the savings you are making via prepayment is considerably more than penalty charged.  

3. Negotiate repayment terms:

Negotiating the amount, interest rate, and tenure is among the most important steps. Don’t hesitate to negotiate as lenders also don’t want to lose an eligible applicant. Even a paltry 0.2% reduction in interest rate can yield massive benefits by the time you fully repay the loan. You can also request the lender to fix a bi-weekly EMI payment agreement instead of a monthly one. By doing so, you will be repaying slightly more than what you would have paid in a month.  

4. Choose Auto payments:

Some lenders even role out discounts if the borrower opts for their service of auto payments and statements as it saves a lot of time and paperwork for the former every month. Since the payments are made seamlessly, there are no late fees and the discounts help you to save a few bucks.

5. Round off the odd payments:

It is quite a practical move. Suppose, your EMI every month is around INR 1,700, always opt to pay INR 2,000. The additional INR 300 every month won’t hurt your budget and you will be paying off additionally INR 3,600 every year.   
 

All the above-mentioned ways help you repay the loan easily and in some cases even faster. The two-wheeler loans have several benefits but everyone wants to be debt-free. The longer you will stretch your tenure, higher the amount of interest you will pay. And we can always use the extra money saved in fulfilling plans we had been putting into the cold storage.