Purchasing a bike on EMI

In the fast-paced world that we live in today, taking a loan has been made as easy as making instant noodles. With zero interest rates and attractive offers on EMIs, people are quickly and easily opting for loans to improve their current lifestyle and reach out to things that may not be accessible otherwise. Being flooded with offers from both banks and NBFCs, the cardinal rule of taking loans still apply - Don't take a loan because it is available, take it because you need it, and ensure that the total value of all your EMIs does not exceed 50% of your income.

One loan that is often touted to be your first step to freedom is a two-wheeler loan. Not as heavy as a home loan it enables access to places that were earlier difficult to reach. A two-wheeler loan may be taken when you want to buy a bike or scooter relatively quickly without making a huge one-time investment.

Also Read: Top Affordable Adventure Bikes in Indi

Advantages of Purchasing a Bike on EMI

• Some financers offer up to 80% loan of the bike's on-road price, which reduces the investment from your end to the bare minimum. Even if you don't have ready cash, this loan is a great way to obtain your dream bike.
• The tenure for repayment can be as long as four years. Hence, the EMIs may not burden you as much and you'll have enough time to repay.
• Paperwork is minimal in most cases and if you have things in order, the loan gets processed in no time.
• A bike is a productive asset. It will work with you every day to save your time, increase your efficiency, productivity and earning capacity. This works even better if you have a sales job or a job that requires you to travel frequently.
• You can use your new bike as a source of income too. Bike taxis are increasingly becoming popular with the urban commuter who wants to avoid traffic snarls and doesn't mind hopping on a pillion ride to get to their destination quickly. If you start using your bike as a bike taxi, you can earn back your EMI repayment as well!
• If you are availing a loan for the first time in your life, this becomes a great tool to build your credit history. A credit history is a borrower's record stating if they've managed to repay their loan without defaulting. This credit history is accessible to all lenders who will use it as an input to decide your next loan application. For example, if you apply in the future for a car loan, home loan or personal loan, your credit history will be scrutinized and considered. As your bike EMI is easy to repay, it becomes a perfect way to build a good credit score.
• Another great thing about going with a reputed lender like Hero FinCorp is their friendly customer service that handholds you every step of the way, and even offers gentle reminders to help you pay your EMIs on time. They even offer to customize your loans by offering a variety of tenures and down payment amounts to find the right financing solution for you.

While the financial benefits are numerous, a bike, in true essence, goes beyond its commuting purpose and helps you realize your dreams. There is a certain pride that comes with 'apni gaadi' which gives you the ability to escape the crowd and go where your dreams take you. To list it out, a two-wheeler can
 

• Let you rev the gear at midnight and travel to your favourite ice cream joint without a second thought. In short, it increases both your comfort and convenience levels to go where you want, when you want.
• Help you create a work-life balance. By reducing commuting time, it allows you to spend quality time with your loved ones.
• Enable you to avoid overcrowded trains and buses. Ride comfortably on you own terms!

With so many reasons to go for it, what's stopping you?

Bike loan eligibility criteria 

• You should be an Indian national above 18 years of age.
• If you are a salaried professional, you should have held employment at least for a year with six months in the current job.
• If you are a business owner, your business should be at least a year old at the time of loan application.

Know more about bike loan eligibility criteria

What documents are required to buy a bike on EMI?

 
If you are looking for a bike purchase on EMI, here is the list of documents you will need. 
 

• Identity proof:

  This can be your Aadhar card/ Passport/ PAN card/ driver's license/government-issued identity card.
   

• Address proof:

  For this, you can present your latest utility bills/ latest municipal or property tax receipt/ Passport/ driver’s license/ bank account or post office saving account passbook

• Income proof:

  Your bank account statement/ recent salary slips/ salary certificate/ recent ITRs/ Form 16 will serve as valid proof of income
   

• Passport size photographs

• Any other documents that your lender may ask at the time of bike loan approval.

 
Also Read: Easy Steps to Calculate EMI for Bike Loan

Now that you know about the eligibility criteria and documentation required, let us take a quick look at the loan application process. 
 

What is the procedure to get bike on EMI?

 
Let us take example of a financing solution provider like Hero FinCorp to demonstrate. Hero MotoCorp is one of the leading two-wheeler manufacturers in the world. From the all-time favourite Splendor to the latest candy blazing red coloured Duet, it is the first choice for two-wheelers across the country. If you are eyeing one of these dream bikes to purchase, here is how you can get it financed
 

• Navigate to the Hero FinCorp website
• Fill up the details requested under two-wheeler financing solutions
• You'll be put in touch with a Hero FinCorp sales executive who will then
  • Understand your background and financing requirement
  • Explain the details of the loan application process and required documentation
  • Confirm your eligibility as per the above criteria
  • Present customized EMI, down-payment, and tenure options
  • You'll then be presented with a simple loan application form which when filled, will be uploaded onto their IT system.
  • In the next two hours, the credit appraisal system provides them with a revert about your credit history.
  • Within a matter of minutes of receiving a positive response, a dealer executive will be directed to deliver your dream bike to you and off you'll go on the ride of your life!

How to get a low-interest rate while buying a bike on EMI? 

1. Higher resale value:

   Your bike's resale value is the first factor that can help you in availing a lower two-wheeler loan interest rate. Don't buy a bike only for its appearance or high-tech features; take time to learn about the bike's resale value.
    
   Bikes with a good resale value assure the lender that their funds are safe even if you default on a loan. The lender can recover most of the unpaid EMIs by auctioning your bike. 
    

2. Higher down payment

   Another way to acquire a low-interest bike loan is to choose a higher down payment amount. Assume the bike you want to purchase costs around Rs 1,00,000. Based on your profile, the lender approves you for a loan-to-value (LTV) of 90%. But instead of applying for the approved amount, if you go for 40-50% LTV, the chances of securing low interest rates for the loan are very high. 
    
   The reason is that a larger down payment reduces the credit risk to the lender. Since you invested a higher out-of-pocket amount in the bike purchase, you also don't want to lose your bike in this situation by defaulting on a loan. 
    

3. Income

   Two-wheeler loans do not have stringent policies for income. Even if you have a monthly earning of as low as Rs 15,000, you can still get loan approval. The reason is the bike you intend to purchase will be hypothecated with the lender until you repay the entire dues. 
    
   Many believe they qualify for a low-interest loan provided they meet the lender's minimum requirements. However, the truth is that it only makes you eligible for a loan. A higher income and good credit score are required if you want an affordable interest rate.
    

4. Repayment tenure

   The simplest way to secure a low-interest loan is to opt for a shorter repayment term. It gives the perception to the lender that you are good at managing your budget and that your income is good enough to manage the higher EMIs. Even if the lender does not reduce the interest rate, you can still save money on the interest component.
   
   Choosing a longer bike loan tenure lowers your EMI but increases the overall interest payable amount. Thus, choosing a shorter term is always the smart move if your budget allows it.
    

Also Read: Pay Attention To These 7 Factors While Taking A Bike Loan
 
Here, you can see an immense advantage of going with the Hero umbrella of products for both your two-wheeler and your loan. Choosing the same brand for both products is any day a better option than a bank financed two wheeler loan. With the festive season starting soon and a great monsoon to back up a good harvest, you'll be subject to even more attractive offers from lenders. It's time to leave your cares behind and enjoy your ride to freedom.
 
Disclaimer: This post was first published on 8th July 2016 and has been updated for the latest information, freshness, and accuracy.