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Personal Loans are the best funding options for people who nee . . .
15 Mar, 2023
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When it comes to two-wheelers, the clientele size cuts across age, gender, professions, and social strata. There are many reasons why its demand keeps growing. With bikes available with different features, designs, and capacity, today the buyer has a variety of options. Be it a fancy bike or a regular scooter, they all save us from crazy traffic jams, give us a sense of ownership, and provides us comfort and safety when travelling.
From a financial point of view, its low maintenance cost and fuel efficiency make it a pocket-friendly choice. Bikes also have a better resale value. However, despite so many advantages, people don’t have the budget to spend a large chunk of their savings to buy a bike. But they have no reason to be disheartened as there is a solution. What boosted the sale of two-wheelers is the easy accessibility of two-wheeler loans. With the loans being offered at reasonable interest rates, anyone can comfortably pay the amount in easy installments.
Usually, a two-wheeler which people buy lies in the range of INR 45,000 – INR 85,000 but not many can afford to pay that amount at one go. A two-wheeler loan can either be a secured loan or an unsecured one depending upon whether you want to pledge collateral or not. Presence of something valuable as guarantee lowers the rate of interest. You can also opt to use the vehicle itself as the collateral. In that case, it remains mortgaged throughout the loan tenure. Once you pay the last installment, you must then terminate the hypothecation bond and submit the necessary documents to the RTO, to get the bike in your name. Generally, financial institutions require you to pay a minimum of 10% of the market of value of the two-wheeler as a down payment. You can get the rest of the amount as loan and purchase your favourite bike.
As far as the eligibility criteria goes, if you are an Indian citizen above 18 years old and have a regular source of income you can get the loan. A salaried employee needs to have a minimum one year of employment with at least 6 months at current job and self-employed professionals’ current business must be at least a year old. You must have your KYC documents like identity and address proofs. You will have to submit salary slips or bank statements as income proofs as well.
A two-wheeler loan solves your financial dilemma. You can break the loan amount in easy installments according to the convenience of your monthly budget and not feel burdened by the loan. A little amount every month will pay for the bike in a year or two while buying it in one go can leave you cash-strapped. Availing two-wheeler loans and paying smaller, more manageable EMIs, means you will always have enough for other expenses like life insurance, home rents, medical bills, etc. and for some savings as well.
Interest rates for a bike loan range from somewhere between 10% - 25%. These rates vary from lender to lender. It also depends on your annual income, bike’s market, and resale value. Financial institutions also offer the choice between fixed and floating (which changes according to market rate) type of interest rate. The good news is that the interest rates have decreased in the past few years because of the growing size of the two-wheeler industry and the presence of multiple lending institutions. These days, the applicant is also offered several schemes and offers like a rebate on the processing fees, free insurance or discounts on the next buy. A loan can take care of additional costs like accessories for your two-wheeler.
With the rise of Digital India, loan approval processes are now done over the internet and the sanctioning time has come down to a day or two. The whole process can be completed with just a few clicks on the lender’s website. If the applicant is an eligible candidate and has all the required documents, lenders sanction the loan in no time.
Offering up to 90% of the bike’s on-road price with the period of repayment varying from 12 - 48 months, the loans can be paid off through smaller installments. Shorter the duration, bigger will be the monthly EMI amount but longer tenure means that EMIs won’t be sharp. One can choose the tenure according to his/her repayment capacity.
While most applicants who take bike loans are usually first-time loan seekers and that’s why lenders give less importance to their credit history and just check if they have a stable source of income. However, loans involving a bigger sum like a home loan or car loan, a good credit score that reflects the history in loan credits and repayments, is necessary. And because two-wheelers are quite affordable with smaller EMIs, a two-wheeler loan is an easy way for young professionals to improve their Bureau Scores which will increase the chances of approval of all the future loan applications.
With so many advantages of two-wheeler loans as mentioned above, you can stop admiring your dream bike from a distance, walk into the showroom instead and come out on a bike.
The act of paying out money for any kind of transaction is known as disbursement. From a lending perspective this usual implies the transfer of the loan amount to the borrower. It may cover paying to operate a business, dividend payments, cash outflow etc. So if disbursements are more than revenues, then cash flow of an entity is negative, and may indicate possible insolvency.
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