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18 Nov

How To Avoid The Common Mistakes While Buying A Bike On Two-wheeler Loan

  • By Editorial Team


Since its invention, the motorcycle has caught everyone's fascination, from the older generation to the younger one. It is not just about a thing of possession. For most in India, it’s about the affordable freedom that comes with it – the freedom to travel anywhere, freedom from public transport and freedom to cruise along empty roads. Infact, in our country, two-wheelers dominate the automobile landscape, making up for 81% of the domestic auto sales in FY19.

With the easy availability of finance and flexible repayment options, buying a motorcycle has becomes a lot easier than it was a decade ago. However, since the buying decision is often influenced by emotions, people often tend to make mistakes while availing a two-wheeler loan.

If you are planning to fund your purchase through a motorcycle loan, watch out for these common mistakes that can be avoided.

Common Mistakes to Avoid while going for a Two-Wheeler Loan

Following are five common mistakes motorcycle buyers tend to make while buying it through motorcycle loan.

  1. Selecting a Bike before knowing the Approved Loan Amount

Many motorcycle enthusiasts select a bike even before knowing how much loan money the lender will approve for the purchase. Also, in many cases, the buyer gets influenced by the marketing skills of the salesperson and ends up buying a higher-end motorcycle.

Buying a bike worth Rs 1 lakh, when the lender most likely will only approve Rs 60,000 is not a viable option. This will only lead to a debt trap and increase the maintenance cost for your bike like insurance, spares, fuel etc.

Therefore, it is always advisable to get your two-wheeler loan approved from the lender before purchasing the motorcycle.

  1. Lack of Research before Selecting Lender

Nowadays, most buyers do not think twice before homing down on a lender and snapping up the readily available finance. A lot of bike buyers also settle for financing options offered by bike dealers, which in certain cases, turn out to be more expensive than the rest.

Generally, such loans look attractive in the shorter term period but turn out to be pretty expensive in the long run. For that reason, you should always research the options and benefits available and then select the lender that suits your financial condition.

  1. Over-borrowing

This phenomenon is most common among first-timers and young buyers. They often tend to stretch on the borrowing limit to finance a higher-end bike that is worth more.

Over-borrowing is not a logical step, as it results in higher EMIs and you may need to cut down on important spends. You need to calculate your EMI beforehand and check how much of your income, you can let it go towards it. If you fail to pay your EMIs, it will dent your credit score and might result in the confiscation of the two-wheeler.

  1. Not Reading the Fine Print

Most of the borrowers refrain from reading the fine print of loan documents and tend to rely on the words of officials. This a very bad practice as the risk of falling into a debt trap is highest in such cases.

Reading fine print helps you to get answers to many questions, which will help you to understand your motorcycle loan. Here are some of the points you should look for while reading the fine print:

  • Is the interest rate charged fixed or variable?

  • What is the grace period on the loan?

  • What is the full term of the loan?

  • How the interest rate is calculated?

  • How much down payment is required for taking the loan?

  • What happens in case of late payment/ What is the penalty on late payment?

  • What happens in case of non-payment of EMIs?

  • What are charges and processing fee to get the motorcycle loan?

  • What is the prepayment policy?

Reading the fine print takes time, but will save you from a lot of headache later on.

  1. Lack of an Optimum Repayment Plan

Many borrowers do not plan their repayments and often tend to go for repayment options that have a longer duration and smaller EMI amount.

Just because the loan has a longer repayment term and affordable EMI, does not mean it will suit your needs. Your loan amount should not be based on how much will be your EMI amount. You should keep in mind that the longer you drag the loan, the higher you will end up repaying.

Having an optimum repayment plan helps you to clear the debt in the shortest possible time and is a recommended option. Select the loan option, which allows flexible EMIs and grace period, so that you never default an EMI. Also, it helps to improve your credit score.


Spending extra time on research of two-wheeler loans is as important as spending time on which motorcycle is best for you. Proceeding in a logical manner will help in rooting out the emotions involved in the whole decision-making process and make you less prone to mistakes.

Of course, it also helps you in enjoying your ride smoothly and keeping the excitement level intact.


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Did You Know

Cash Flow

Cash Flow refers to the movement of cash in and out of a company. It is measured by the difference in the opening balance and closing balance at the start and end of a period respectively. If an organization earns more than it spends, then cash flow is positive, or else negative. Positive cash flow can be ensured through sale of goods, services, assets, increase of sale price, lowering of costs, obtaining a loan, faster collection and slower payment.

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