Every year millions of people buy two-wheelers in India. May it be a person who needs to commute every day to his job, a parent who needs to drop off their kids at school or someone who needs to travel short distances extensively for work and personal errands. Two-Wheeler is essential in many people’s lives; most people find themselves in need of purchasing a new Bike or Scooty at some point in time. Although there are several ways of financing your new Two-Wheeler purchase, few might be better suited for you then rest. Many banks and NBFCs (Non-bank financial companies) provide personal loans for Two-Wheeler purchases which cover 100% of vehicles on-road price and take a load of down payment off from you. There are more benefits that you can reap by financing through a personal loan while buying a new bike.
Why a personal loan is a better option for your Two-Wheel purchase. Image source: https://www.bajajfinservmarkets.in/
Reasons to finance your Two-Wheeler with Personal Loan:
Broader Eligibility Criterion:
Personal loans have relatively low-income requirements from borrowers when compared to Two-Wheeler loans and other loan types offered by banks and NBFCs, making it the most suitable option for a wide range of people, including working professionals. You can apply for a personal loan even when your income is as low as 15,000 INR, whereas Two-Wheeler loans have a borrower’s income requirement as high as 50,000 INR. Also, the loan tenure, the interest rate, and the loan amount will greatly depend on the income of the borrower.
Credit History and Collateral are Optional:
Most people choose to buy a bike as soon as they find a new job, which makes it difficult for them to have a Credit History and CIBIL score. In those cases, personal loans are more flexible since banks may agree to provide you with the loan based on your income and employer details. A vehicle loan or Two-Wheeler loan will need a good CIBIL score and Credit History. The chances of your loan application getting rejected are high for those without good Credit History; once your loan application is denied by a bank or an NBFC, your CIBIL score goes down. Another huge benefit of applying for a personal loan is that you do not have to provide Collateral or Security related documents to the bank. Other financing options may require your vehicle to be hypothecated to the financier.
Coverage of 100% on-road Price:
Many lenders when they offer a vehicle loan or a Two-Wheeler loan, may only cover your ex-showroom price, which would be close to 80% of the total cost (on-road price), rest you will have to pay as a down payment. But if you choose a personal loan, you can apply for 100% of the total cost. They can range from 50,000 INR to 25,00,000 INR, which makes buying your dream bike easier even if you plan to buy a bike from a high price segment. You can apply for a personal loan even in case of purchasing a used bike. You can also increase your required loan amount to buy additional gear for your vehicle.
Ease of Ownership Transfer and Documentation:
In case of buying your Two-Wheeler with a personal loan, your bike doesn’t have to be hypothecated to the bank; you get the instant ownership which will save you the cost of additional documentation (1500 INR) while registering your vehicle. You can choose to sell off your bike or transfer ownership to someone at any point in time, and you do not have to wait until the loan tenure is completed. Wherein, a hypothecated vehicle owner has to acquire NOC (no objection certificate) from the lender stating that loan tenure is complete and the loan is paid in full, in case of ownership transfer.
Lower Interest Rates & Shorter Tenure:
The interest rates of personal loans start from around 10.5% and they are often more economical than other financing options. The interest rate also does not depend on the bike’s segment. Lower the interest rate, lower the EMI (Equated Monthly Installments), which would lessen your financial burden every month. The loan tenure is also quite low in personal loans(up to 5 years) and flexible in terms of Prepayment and Foreclosure and the charges for the same will be negligible or lower compared to other financing options. Oftentimes the foreclosure and prepayment charges will be Zero in personal loans.
If you plan to purchase a brand new bike for yourself, by opting for a personal loan, you can enjoy the benefits of competitive interest rates and hassle-free ownership. Not only is a personal loan a great financing option for your Two-Wheeler purchase, but it is also an excellent choice for all other financial necessities such as education, car purchase and expenses of family functions. Make sure you follow the lender’s eligibility criteria and read through the terms of the loan thoroughly.