How to Create a Customized Two-Wheeler Loan Repayment Plan to Fit Your Budget?

Owning a two-wheeler can be a liberating feeling. However, buying a two-wheeler requires a significant investment. Affording this amount can be a big challenge for the youth, especially those in college or who have just started their career. Making a lump sum payment of about a lakh or more upfront can be a big challenge. This is where two-wheeler loans come in handy.
 
A two-wheeler loan is a secured loan that enables you to own a dream bike while paying the amount in easy monthly instalments. The interest rates and affordable and repayment is quite easy.
 
However, with increased competition in the financing sector, today, there are many lenders offering quick two-wheeler loans with attractive features. Thus, you must do the necessary research to find the loan that fits your budget and helps you fulfil your financial goals with ease.
 
Creating a customised two-wheeler loan repayment plan can help you use a two-wheeler loan in the best way. Read on to discover a few financial tips to create the most feasible two-wheeler repayment plan.
 

How to create a flexible two-wheeler repayment plan?

 

1. Switch to AutoPay Mode

   Automating your EMI ensures timely payment and avoids the risk of missed or delayed payments, which can result in late fees and penalty charges, and negatively impact your credit score. It also saves time and effort as you don't have to remember to make the payment manually every month.
    
   To automate EMI payments, link your bank account to the loan account. Lenders these days offer online facilities to link your banking details. You can also set up an ECS mandate for the lender to automatically debit the EMI amount on the due date. Just make sure to maintain an adequate balance in your account for auto-debit.
    

2. Use Surplus Funds

   At times, you might receive surplus funds in the form of a bonus or incentive. Common examples of such instances also include an exceptional performance of your stock investment, lottery winnings, office bonus, or unexpected pay raise. You can use these earnings to customise your bike loan repayment and pay off a portion of your bike loan.
    
   Assume you have an outstanding loan of Rs 45,000 that you must repay in the next 30 months. You receive a windfall gain of Rs 30,000 and wish to prepay Rs 25,000. This way, you can reduce the interest payable amount.  But before proceeding with this step, check the prepayment charges and ensure there is enough time left to loan conclusion. 
    

Also Read: How To Get A Bike Loan For Students In India?
 

3. Round-Off your EMI

   "Round off" in loan repayment refers to the practice of rounding the calculated payment amount up or down to the nearest multiple of 1000. Borrowers usually do this to simplify the payment process and avoid dealing with odd amounts.
    
   For example, suppose you have a Rs 1,00,000 bike loan for three years and an interest rate of 11% per year. If you were to calculate the monthly payment, you might come up with a payment amount of Rs 3,274 per month. If you round off this amount to the nearest 1,000, the actual payment amount would be Rs 4,000 per month. Doing this will help you close your two-wheeler loan much earlier.
    

4. Increase Downpayment

   The down payment is the amount you pay upfront at the time of purchasing the bike, and it reduces the loan amount that needs to be financed.
    
   If the down payment is higher, the loan amount is lower, and this can reduce the EMI. For example, if the bike costs Rs 1,00,000 and you make a down payment of Rs 30,000, then the loan amount is Rs 70,000. If the loan has an interest rate of 10% and a tenure of 3 years, then the EMI would be around Rs 2,267. However, if you make a down payment of Rs 50,000, then the loan amount would be Rs 50,000, and the EMI would be around Rs 1,589. Altering a downpayment is the best way to create customised two-wheeler loan repayment. 
    

5. Use EMI Calculator

    A loan EMI calculator is a financial tool that helps you calculate the monthly instalment amount you need to pay to your bike lender for two-wheeler loan repayment. To use this calculator, you are required to enter the payback term, interest rate, and financing amount.
    
   Simply experiment with different variable combinations until you achieve the desired EMI. You can visit any bike lender's website to access the bike loan EMI calculator.
    

Also Read: Factors that Affect Interest of Bike Loan
 

Final Words

 
Creating a customised two-wheeler loan repayment plan is crucial to achieving your financial goals and ensuring a stress-free repayment process. To make your repayment flexible, use surplus funds for prepayment, round off your EMI to the nearest 1000, and increase your down payment. Remember, timely EMI payments are essential for maintaining a good credit score and avoiding penalty charges.