Some Common Myths About Two-Wheeler Loan

6 Common Myths about the Two-wheeler Loans

1. Available to the High Income Group Only

   One of the most common myths about the two-wheeler loan is its availability to high-income groups. However, the fact is quite different from the myth. You can easily apply for this loan even if you have a modest monthly income as low as Rs 15,000 per month. The low EMI makes it easily accessible across all income ranges. However, low-income persons should opt for a bike loan with a long repayment period. A shorter-term equates to a higher EMI. Furthermore, a higher EMI could indicate to a lender that you are likely to fail on a loan. The problem eventually leads to a loan denial.
    

2. Interest Rates are High

   This is yet another widespread myth about bike loans. Many people feel that because the bike loan is only accessible for 48 months, lenders impose higher interest rates to maximise their profit. However, the reality is quite different. Financial organisations are only concerned about credit risk when offering any type of loan. When you take a loan to buy a bike, the lender hypothecates the vehicle with themselves. They have the right to auction it and recoup their losses if you default. As a result, bike loans are easily affordable due to the lower credit risk associated with them.
    

3. You Can Only Finance a New Bike

   Two-wheeler loans are surrounded by several myths. One of them is that you can seek finance only for a new bike. The costs of bikes are much lower than cars, and we all know that acquiring a used bike is substantially less expensive. As a result, the majority of individuals believe that lenders will not approve applications for used bikes. However, the fact is, if the used bike that you are purchasing is in good condition and it holds a higher resale value, the lender approves you for a loan.
    

4. Credit Score is a Key for Approval

   This misconception is prevalent across all financing products, not just two-wheeler loans. Credit scores are important in evaluating bike loan eligibility but they are not the only aspect that the lender takes into account. While doing a risk assessment of your profile, your income, employment stability, and age are also taken into consideration. In case your credit score is low because you are a first-time applicant or due to erroneous details with the credit bureau, the lender won't mind approving you for a loan. Furthermore, consider adding a co-applicant to your application to get a better deal. 
    

5. Lower Interest Rate Makes Your Loan Affordable

   Many individuals believe that if a lender approves you for a low-interest loan, you don't have to think about anything else. However, this is not true at all. There are several other charges associated with a bike loan. Some of these charges are processing fees, foreclosure penalties, and partial prepayment penalties, among others. Even if the fees are small and are based on the principal amount/principal outstanding, you should still factor them in.
    

6. Getting a Bike Loan is a Tedious Process

   Three parties are involved in availing of a bike loan—a financial institution, borrower, and the bike dealership. Many people believe that loan processing takes a few weeks or even months because of the number of parties involved. This is yet another myth about a two-wheeler loan. Nowadays, getting a bike loan is a matter of a few clicks. You can easily initiate your loan application online. The required documents for bike loans are also kept at a minimum. Once you submit your details and the lender successfully validates them, the loan will be disbursed within 48 hours. 
    

Also Read: 7 Reasons Why Hero FinCorp Two-Wheeler Loan is Perfect for Your Hero Bike
 

To Conclude

Two-wheeler loans have a reputation for making life easier. Its numerous features such as low-interest rates, flexible terms, and high loan-to-value (LTV), make them an ideal tool for obtaining funding for your dream bike. But before you commit to this finance alternative, it's critical to debunk all of the loans myths that often surround two-wheeler financing.