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28 Aug
  • Editorial Team
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India’s two-wheeler market is flooded with bikes of different features, designs and capacities and there are many takers for each model. Not only Indian manufacturers like Hero Motorcorp and Bajaj, but foreign manufacturers like Harley Davidson and Suzuki are also competing in this sector. Even electric bikes are trying to get a share of this pie.It is not only the popularity of two-wheelers but also the easy accessibility of loans that is boosting the rising number of bikes on roads.

From a college-goer who is trying to make a style statement to an aged person who has to drop his grandkids to school and from a businessman in a small town who has to travel around the city for meetings to a mid-level professional who has to battle the crazy traffic jams on her way to office, two-wheelers are the preferred mode of transport.

Irrespective of age, gender and profession of the owners, two-wheelers are all-weather friends. A decent two-wheeler can cost around Rs 50,000-80,000 and often people can’t afford to pay that big an amount at one go. That’s where two-wheeler loans come into the picture. Two-wheeler loans are mostly secured loans that get you the required money in a quick and hassle-free manner.

What is two-wheeler hypothecation?

Like car and house loans, two-wheeler loans are secured i.e. the vehicle becomes collateral and remains mortgaged throughout the loan tenure. If the applicant defaults on the payment, the financial institution has the authority to seize your vehicle and auction it to recover its money. Once you have paid the principal amount and the last instalment, make sure to terminate the hypothecation bond and submit the necessary documents to the RTO to get the bike in your name.

Reasons to finance your two-wheeler purchase


 

  1. Flexible tenure option: The tenure of the bike loans usually varies between 12 to 60 months. Shorter the duration, bigger will be the EMI amount you pay every month but longer tenure will keep the EMIs from going steeper. So, one has the option to choose the tenure according to his/her repayment capacity. Also one has the flexibility to choose between fixed and floating (which changes according to market rate) type of interest rate.  

  2. Affordable: For 110 cc to 150 cc bikes, which makes for the biggest chunk of bikes sold in India, paying around and above Rs 50,000 at one go may not be possible for many. However, the bike loans cut the amount in easy and small instalments making it extremely affordable.  

  3. Own your dream bike: No matter, which bike you wish to buy - regular bike, sports or a luxury bike - loans are available for different brands and models. However, just a suggestion, buying a more mainstream bike will help you get more buyers and a better price if you plan to sell it. For the same reason, lenders lower the interest rates on popular bikes and not so much on offbeat choices.

  4. Relieves financial burden: Even if someone has the savings, buying the bike in one-go can completely shake his/her monthly budget. The person may have other expenses like mutual funds, life insurance, bike insurance, home rents, miscellaneous bills, etc. which can completely drain him/her of cash. To steer clear of such financial burden, opting for loan is the best way. The additional cash can be used in paying a bigger down payment, which will bring down rate of interest.

  5. Build your credit score: A prerequisite for any kind of loan approval is a good credit score and credit history but because the EMIs are lower in the two-wheeler loans that there is a negligible chance of defaulting. Once, fully paid, it would reflect positively in the credit history, making your future loan approvals easy and quick with lower interest rates.      

  6. Margin of Finance: 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. One just needs to make sure whether the lender is including the registration and insurance cost in calculation or not.

  7. Partnerships with dealers: Most financial institutions in India have tie-ups with bike dealers, which help you get better deals like lower interest rates, cash backs, and discounts on your two-wheeler purchase etc.

Eligibility and documentation

Here’s what you need to have to be eligible for a two-wheeler loan:

  1. You should be an Indian and above 18 years old. 

  2. The loan amount applied for should be below Rs 10 lakhs. 

  3. You must be a salaried employee with over 6 months at current job or self-employed individual with your current set-up being at least a year old. 

  4. A good score is a proof of your ability to repay the loan on time and so, improve it before applying by clearing pending loans because a poor score will lead to a higher rate of interest.

Following are the documents you need:

  1. Salary slips and bank statements as part of your income proof

  2. Identity and address proofs

  3. Passport size photographs

You can visit Hero FinCorp’s website if you need further clarification.

Two-wheelers such as Bikes are extremely fashionable and useful for various reasons such as low-maintenance, fuel-efficiency, cost-efficiency and most importantly, to wade through potholes-filled Indian roads with relative ease. With new manufacturers and new models entering the market, there will always be both curiosity regarding two-wheelers and necessity to buy them. For those who find it difficult to buy a two-wheeler at one-go, two-wheeler loans will always come to your rescue.

Did You Know

Disbursement

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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