Your money: five tips for getting the right two-wheeler loan



Many financial institutions offer bicycle value loans for up to 90% to 95%. The LTV ratio depends on factors such as the type of two-wheeler and the profile of the applicant.

Want to buy the bike of your dreams but don’t know how to find funds? Keep your worries aside. With two-wheeler loans, you can raise funds to make your dream of owning a bicycle come true.

Here are five things to consider before applying for a two-wheeler loan to make sure you get the best deal possible.

To conduct research
Different financial institutions have different loan terms. In addition, the interest rate, maximum loan amount and loan-to-value ratio (LTV) differ from one financial institution to another. When applying for a loan, be prepared to pay various costs associated with financing the two-wheeler, such as processing fees.

Check the hidden clauses with different lenders as they can affect your loan application form. With a good research, you can even find a financial institution that charges minimal or no fees for processing a loan or prepaying part of a loan.

Amount of the loan
Many financial institutions offer bicycle value loans for up to 90% to 95%. The LTV ratio depends on factors such as the type of two-wheeler and the profile of the applicant.

Compare the LTV ratio and the loan amount offered by different lenders. You don’t want to be in a situation where the value of your chosen bike is Rs 1,000,000 and the lender is offering a maximum amount of Rs 20,000. So select one that pays a loan amount suited to your needs. When selecting a financial institution, the loan amount should never be over-indebted. You might find yourself in a situation where the eligible loan amount is greater than your requirements. In such cases, the lender may encourage you to buy a more expensive bike by opting for a higher loan amount. On the other hand, going over budget can hurt you financially in the long run. You may find it difficult to pay off your monthly EMI, which will lead to a dent in your credit history.

Affordable interest rate
Financial institutions determine loan eligibility and loan interest rate for two-wheeler based on factors such as income, age, employment status, and credit history of the applicant. You don’t always need a strong credit history to get approved for your two-wheeler loan, but a solid credit rating will help you qualify for two-wheeler financing at an affordable interest rate.

Also compare the Annual Percentage Rate (APR) with different financial institutions, as it includes the costs and expenses associated with obtaining financing for two-wheelers. Therefore, it is advisable to choose a financial institution that offers a two-wheeler loan at an affordable rate of interest.

Special offers
Most financial institutions launch attractive loan offers during the holiday season. Some even have seasonal offers such as a monsoon sale. These offers may include a lower interest rate, no down payment, 100% financing, no processing fees, etc. Also, if you are an existing customer, there is a good chance that they will offer you better interest rates on loans compared to new customers. If you get a two-wheeler loan during a special offer period, you can save a lot of money on your EMI throughout the loan repayment term.

Reimbursement options
Check the repayment options available with different lenders. The longer the term of office, the higher the interest component. Choosing a plan with flexible EMI loans will allow you to pay off the loan quickly while ensuring that you never miss an EMI payment.

Source: Tax Guru

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