Choosing a two wheeler loan is a crucial financial decision that requires thorough research. This blog aims to simplify this process for you. Here are 13 important factors you should have clarity on before finalizing your two wheeler loan:
1. Rate of interest
This is the most important factor. Comparing interest rates of different lenders will help you to find the most cost-effective option for you.
The rate of interest that you would be offered by lenders depends on their credit policies, your credit score, employment history and other factors. If you want to plan monthly EMIs to pay for your bike loan, click here to use our Bike Loan EMI Calculator.
2. Repayment tenure
Figure out the number of months you want to spread out the repayment of your two wheeler loan and then see how many lenders are willing to offer that loan term.
It is advisable to not stretch out the duration more than your requirement. The longer your repayment period is, the more interest you will end up paying.
3. Flat rate & Reducing rate
You should check this with every two wheeler loan scheme you come across.
Under flat rate, the interest is charged on the principal amount throughout your loan tenure. This means that until your last instalment, you will pay interest on the full loan amount.
In case of reducing rate, you only pay interest on the loan amount that you’re yet to pay. This means that your interest expense reduces with each instalment.
4. Vehicle loan or Personal loan
If you decide to not go with any two wheeler loan, you also have an option to take an instant personal loan.
An instant personal loan is an unsecured loan that is approved and disbursed faster than vehicle loans, often within a few minutes or hours. There is no collateral needed and the money can be used for any purpose. Click here to try out the Zype app for a fast personal loan experience.
5. Fixed-rate or floating rate
In fixed-rate, you pay the interest rate that is pre-decided throughout the loan tenure. You know beforehand the total interest amount you will need to pay.
In floating rate, the interest rate might vary quarterly based on repo rate and other factors that affect your lender. If the interest rates fall during the loan tenure, you would benefit from it if you have opted for floating interest rate and vice versa.
7. Minimum Down payment required
Down payment is the amount you pay upfront when buying a vehicle on loan. Minimum amount of down payment required for two wheeler loans could range from 0-30% of the on-road price of the vehicle and is usually decided based on your credit profile.
If you have enough extra money, don’t shy away from paying a higher amount as down payment, which means lesser expense on interest paid.
8. Documents required
Check beforehand all documents the loan companies are asking for and keep them handy to avoid unnecessary delay.
Here is a list of documents that lenders usually ask for:
— KYC documents such as PAN card, Aadhar card, driving licence, etc.
— Passport-sized photos
— Income proof – salary slip & bank statement
9. Eligibility criteria
Every loan company has different criteria and credit policies based on which they approve loans. It includes income, credit score, employment status, existing debts, etc. Make sure you’re eligible for a loan before applying for it.
10. Disbursal time
It could take up to 7 days to get money after you apply for a two wheeler loan.
Therefore, it is recommended to start the loan process early. This ensures that if you decide to buy your vehicle on an auspicious day, the delay in loan process does not become a hindrance.
11. Customer service
It is advisable to go with a loan company that has good customer support. This would ensure that you get reliable communication throughout the application process and also post disbursal.
12. Discounts and special offers
Check if there are any offers or discounts going on with two wheeler companies or their lending partners. This is very common during festive occasions like Diwali, Republic Day, etc.
13. Extra charges
Make sure you know about these charges before finalizing a loan:
— Loan Processing fees – It is a one-time fee charged for the administrative costs. Generally, the processing fee ranges from 1% to 3% of the loan amount
— Penalty charges – This is charged when you fail to pay the instalments as per the loan agreement
— Prepayment charges – The amount you are required to pay when you clear your EMIs in advance