Having a vehicle of your own can be a life-changing boon. With the independence to go anywhere, at any time, a lot of people prefer buying a two-wheeler for their day-to-day lives. Who can keep up with the bus schedule or book cabs every day? It can get tiring and also expensive. Now with the pandemic, people are also avoiding public transport unless necessary. In this scenario, if you’ve had an eye on a bike or a scooter for a while, it’s the right time to act on it!
A two wheeler loan is a type of unsecured personal loan that can be used for any purpose. It’s an excellent idea if you’re looking to get back on the road but don’t have enough money saved up to buy a motorcycle outright.
There are multiple two-wheeler loans available out there. Financial institutions, such as Muthoot FinCorp, even offer loans up to a 100% of the bike’s on-road value. However, there are some important things that you should know about such loans before availing them.
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We have narrowed down five such most important things that you should know about two-wheeler loans:
- Credit score: Your credit score will determine how much money you can borrow from the bank, which determines how much interest you’ll pay over time. Assess your credit score before you apply for a two wheeler loan. If you have a high credit score, you can benefit from reduced interest rates. You can get your credit scores from online bureaus like CIBIL.
- Your eligibility: Every lender has a different set of rules for two-wheeler loans. However, some of the eligibility criteria are standard for every lender. They include:
– You must be at least 21 years of age when applying for a loan.
– If you are a salaried professional, you must repay the loan before the age of 60.
– However, if you are self-employed, you must repay the loan before the age of 65.
– You must have been living at your residential address for at least one year.
– You must also be residing at your declared residential address for a minimum o
– Having a stable income and job for a year before you apply for the loan can also be helpful.
- Interest rates: When looking for a two-wheeler loan, you must compare different interest rates of around four to six banks before zeroing down on the one that suits you the best. Many factors like your credit score, the model of the two-wheeler, your current employer and repayment capability, and the lender, contribute to different interest rates. Based on these factors, the interest rates can range from 9.5% to 17%.
Sometimes banks offer reduced interest for loyal customers, and there are also many offers around the festive season.
- Type of your loan: There are two types of loans for everything, including two-wheelers. These are secured loans and unsecured loans. You have to pledge an asset/collateral of the same amount/value as the loan amount in secured loans. However, unsecured loans do not have any such requirement. Research on which type of two-wheeler loan you want to take. In India, most two-wheeler loans are unsecured. But if you are looking for lower interest rates, some lenders also offer secured two-wheeler loans.
- Tenure of your loan: The tenure of your two-wheeler loan is also an important thing to consider. In India, most banks and lenders offer tenure of around 12 to 60 months or 1 to 5 years for you to repay the loan. This way, you can manage your finances and also simultaneously pay off the loan. Although it will depend on your finances and incomes, if possible, opt for a loan with a shorter tenure. The loan with a higher tenure will have a higher interest rate.
Apart from these crucial things, you should also be aware of other important things like the type of documents required for salaried and self-employed individuals, the nature of the loan, etc. It’s always in your best interest to do your best research, compare interest rates and loan tenure before finalizing your two-wheeler loan. You can also calculate your EMIs online, using a two wheeler loan EMI calculator. It will give you all the information that you need.