The increasing traffic in even Tier-II and Tier-III cities has made it a challenge to commute smoothly, pushing daily commuters to look for better alternatives like bike ownership. Which enables easy navigation. The increasing fares of shared transportation is also one of the prime reasons why people are looking forward to bike ownership. However, people may not always be able to afford self-financing of bike purchases for their desired models. To make financing easy for such individuals, and to also make bike purchase convenient for the rest, lending institutions have introduced dedicated funding options, a bike loan being one of them.
For bike ownership aspirants, a two wheeler loan can simplify bike purchase in many ways. Some of them include -
- Easy funding
- Affordable financing
- Easy repayment
- Quick access
While all of these stand true for all two wheeler loans, it is crucial for a loan aspirant to be aware of the finer subtleties of the advance for better access and management of the credit.
Kinds of Bike Financing You Can Avail
In the present financial market scenario, bike loans are available under two types of funding arrangements as explained under.
- 100% bike finance
It is a fairly new financing framework that allows the borrower to avail the entire cost of the bike as funding. Under this loan type, lenders provide 100% loan to value ratio or LTV, meaning the borrower can avail the total cost of the loan as financing, eliminating any need for self-financing. Availing this loan, however, requires the borrower to meet a higher eligibility requirement than other loans. The terms of the loan are strict too. Hence, the borrower must go through these terms in detail before agreeing to the loan.
- Traditional two wheeler loans
These are bike loans that lenders provide under the traditional framework of secured financing based on LTV and down payment. Under this loan arrangement, a borrower needs to make a certain percentage of the loan cost as down payment via self-financing. The remaining amount is financed by the lending institution as a loan.
The available financing for bike purchase depends on the LTV provided by the financial institution. The remaining amount needs to be met as down payment. Usually, the maximum down payment one needs to meet usually extends up to 20% of the bike’s cost.
Contrarily, the maximum LTV that lenders provide can go up to 95% of the cost of the bike. This enables maximum financing for bike purchase to eligible candidates. However, it may not be prudent to raise the entire available financing as loan. It is because a high financing value also burdens the borrower with a higher repayment load. Resultantly, the interest burden can accumulate, creating unnecessary financial burden. It is thus best to assess the affordability of your loan amount and borrow only as much as necessarily required while financing the remaining amount via an affordable down payment.
Financial institutions provide useful tools like bike loan calculator that can help determine your eligibility for the advance as per your borrowing profile. Further, you can also assess your loan affordability via EMI and interest calculation based on your loan amount and tenure selected. Accordingly, choose a suitable financing value that fits well within your budget while keeping your repayments affordable.
Top Features and Benefits of a Bike Loan
Some best features and benefits of a bike loan that lending institutions provide to make financing convenient for borrowers include the following.
1. Financing of high value
A two wheeler loan is available as a financing option of high-value, which enables easy financing for the desired bike model purchase. The loan amount can go up to Rs.10 Lakh depending on the eligibility fulfilment of the borrower. This thus offers the flexibility of choosing a loan amount and two wheeler as per one’s requirement.
2. An extended repayment tenure
Bike loans from reputed lenders come with long repayment tenures easily extending up to 5 years. This allows for the selection of a suitable term that keeps the repayments affordable. Low EMIs mean easy management of the advance while also ensuring timely repayment of your loan. Further, a flexibility in choosing the repayment tenure allows one to choose a term that best optimises the repayment liability for maximum long-term as well as short-term affordability.
3. Affordable rates of interest and other charges
Bike financing also comes with affordable rates of interest that the lenders levy. Several reasons surround the levy of competitive rates on these advances. For one, many financial institutions in the market provide two wheeler loans, which leads to high competition, thus bringing down the rates. Lenders are also focused on providing better loan services to their customers, including affordable rates.
Other fees and charges on the advance are set at nominal rates too, keeping the cost of the loan in check. Further, to bring down the cost of the loan, individuals can take necessary steps that work in favour of their borrowing profiles, thus gaining lender confidence regarding the lending risk involved. As a result, the lenders can offer better rates on the advances. For instance, a borrower can check his/her credit score and bring it up to 750 at least, if low, to be better eligible for low rates of interest.
4. Approval within a few minutes
If you apply for a bike loan with the necessary eligibility fulfilment, lenders do not hesitate from providing easy and quick approval of the advance. As a rule, you must thus make sure to check if you fulfil all eligibility and document requirements before applying for the advance. It is also advisable to apply for the loan online so as to experience hassle-free loan processing and approval.
Once the bike loan is approved, the lender may take not more than 24 to 48 hours to disburse the loan amount to the seller. The total time taken for disbursal may vary from one city to another. Suitable documentation only hastens the entire loan process, enabling easy financing in the minimum possible time.