Planning On Buying A Two-Wheeler Is It Better To Go For A Loan Or To Use Cash

Why is a two-wheeler so popular in India?

Well, because it is the go-to vehicle for many reasons. From a youngster trying to make a style statement in college to a businessman heading to his shop or a working professional trying to reach office on time; it is a favorite in every age category. From comfort and utility to affordability to fuel efficiency and durability - two-wheelers are not just popular in India, they are also necessary. 

And when it comes to buying a two-wheeler, the question which normally comes to our mind is - should we go for a loan or use cash? 

People generally see loans as a liability and because over a period of time, they end up paying slightly more than the actual market price of the bike, they see it as a loss-making proposition. Our mindset is governed by “cut the coat according to your cloth” rule and we see loans as an extravagant choice because why pay more when you can wait. Then there is the hassle of documentation, paying on time, fear of losing the bike if you default on installments. In short, loans come with an unwanted trail in form of a long repayment tenure while cash settles matters once and for all.

However, what people fail to see are the many advantages of these loans. Especially, bike loans are among the easiest loans to get and repay.

So, let us understand why buying a bike via a loan is a better choice even when cash is available.  

Advantages of buying a bike on EMI

1. Power to purchase: Unlike cars, two-wheelers are extremely affordable. With most bikes falling in the Rs 50,000-to-Rs 1,00,000 category, one just needs proper budgeting to buy it. Another benefit is that most lenders offer up to 90% margin of finance, which means the applicant just needs to make a down payment of merely 10% of the bike’s market value. Isn’t that a piece of cake?
2. Takes off financial burden: Well, even if one has cash, it is not prudent to invest all your savings at once in buying your dream bike and disturb your monthly budget. Also, you never know how much money you need in case of an impending emergency. Opting for a loan is the best way of staying away from such a financial burden. You can always pay a bigger down payment, which will bring down the rate of interest. Easy instalments and flexible tenure make it a win-win situation for the applicant.
3. Helps with credit score: A healthy credit score is a prerequisite for any kind of loan approval. In case your CIBIL score is not that great, taking a two-wheeler loan is the best way to improve it as the EMIs are so low that there is a negligible chance of defaulting. When the loan is completely paid, it would reflect positively in the credit history and in turn, will make your future loan approvals easier and quicker with lower interest rates.
4. Attractive interest rates: Several lenders line up attractive loan offers, especially during festival season, and frankly in India, the next big festive season is always round the corner. That apart, two-wheeler loans are secured loans and thus, one gets more favourable terms as the bike itself is considered collateral and lowers the risk for the lenders.
5. Quick and easy process: If the applicant is an eligible candidate with the right set of required documents and loan credentials, lenders sanction the loan within a few days. The whole process has now gone online and so, you can actually apply for the loan sitting on your couch.
6. Own your dream bike: One is spoilt for choice with so many bikes from so many brands in the market. You may have your eyes set on a particular bike but unfortunately that bike might be out of your budget. In such cases, loans come to your rescue. With easy EMIs, one does not need to make any compromises with their choice.
7. Avail extra benefits like insurance cover or accidental cover: Most financial institutions have tie-ups with bike dealers, which help you get extra perks like zero registration fees, free insurance cover, cashbacks, and discounts on next purchase etc. Truly, more the merrier!

Thanks to two-wheeler loans, everyone can achieve the dream of having at least one bike or scooter. And the above points must have given you an idea about why taking a loan is a good idea instead of blocking your funds by buying in cash. Though you have to pay instalments, you get instant ownership of the bike even when you are buying it via loans. So, don’t wait, just accelerate!