5 Key Factors To Keep In Mind While Taking Online Bike On Loan

Financing a two-wheeler on loan can be a wise and exciting step towards personal convenience and mobility. A bike loan is a useful credit product that lets individuals purchase a two-wheeler by borrowing money from a lending institution.

Now, you can quickly pay the cost of a two-wheeler with the ease of online bike loans. No more handling complex paperwork and waiting in queues. Flexible repayment options, affordable bike loan interest rates, and convenient online applications lead to the best way to buy bikes on loan. However, before applying for a loan, it is crucial to consider numerous factors to make an informed decision.

This guide will outline the five key factors to keep in mind while online bike on loan.

1. Bike Loan Affordability

Understanding your financial position and loan eligibility is the key to buying bikes on loan without breaking the bank. Explore these key factors to buy a bike on loan confidently:

• Analyse Income: Consider your monthly salary and additional income sources to determine your loan repayment capacity.
• Evaluate Expenses: Know your budget by creating a comprehensive list of regular expenses, including utilities, rent, groceries, transportation costs, etc.
• Assess Existing Debt: When creating a budget for the new loan EMIs, consider monthly payments for existing loans, credit cards, and other financial obligations.

These steps will give you a clear idea of your financial health. Accordingly, you can decide upon the bike loan amount that comfortably aligns with your monthly budget.

2. Two-Wheeler Loan Eligibility

Owning a bike takes more than just choosing your dream ride. Bike loan eligibility criteria set by loan providers play a vital role. Understanding the crucial factors affecting bike loan eligibility can streamline the process. Here is a quick breakdown of the key eligibility conditions:

• Age: Most lending institutions set the minimum age for loan eligibility at 18. However, double-check the age requirements with individual loan companies for their particular eligibility criteria.
• Income: Loan providers expect a minimum monthly income to gauge your loan repayment capacity. Usually, it is Rs 10,000 per month, but it may vary based on loan amount, location, and lender.
• Employment Status: Bike loan eligibility options exist for salaried employees and self-employed professionals. However, each category may have specific requirements regarding work experience, income proof, and employment stability.

Remember, these are standard guidelines that may vary for individual lenders. Check the eligibility criteria with your preferred loan provider for accurate information and requirements. Always pay your bills and loan EMIs on time, diversify your credit mix with different credit products, and retain old accounts to improve your eligibility for bikes on loan.

3. Bike Loan Interest Rate

Are you planning to finance bikes on loan? Understanding the bike loan interest rate helps secure a hassle-free and affordable loan plan. A lower interest rate reduces the EMI amount and total interest outgo, significantly affecting the loan cost and helping save money in the long run. Several factors affect the Two-Wheeler Loan interest rates, including the following:

• Credit Score: Loan companies offer competitive bike loan interest rates to applicants with decent credit scores.
• Loan Amount: Borrowing a larger amount increases the lender’s risk, causing them to charge a higher interest rate.
• Repayment Tenure: Longer repayment tenure will lead to more interest outgo compared to a shorter tenure.
• Market Conditions: Market conditions at the time of borrowing largely influence the interest rate.

Your credit score indicates your repayment history and overall credit behaviour, largely affecting your loan amount and interest rate. A good score boosts your chances of approval and makes the entire process smoother and faster. Furthermore, you get access to more favourable loan options, including higher loan amounts, lower loan fees, and longer tenures.

4. Down Payment

When planning to buy a new bike on loan, the down payment is a crucial factor shaping your loan affordability. Therefore, understanding the down payment and its effects is vital. A bigger down payment eventually means you will borrow a smaller loan amount, potentially reducing your loan burden. Moreover, a larger down payment potentially qualifies you for a lower bike loan interest rate, translating into significant money-saving over the loan term.

When borrowing a loan, maintain a debt-to-income ratio of 30-40%. Explore different saving options, such as leveraging an existing investment or saving money in a dedicated account, to minimise your loan requirement and achieve financial goals.
Top NBFCs like Hero FinCorp can finance up to 95% of the bike’s cost, resulting in a minimum down payment requirement. However, contributing the maximum possible towards the down payment reduces your loan burden and keeps repayment easily manageable.

5. Additional Costs

Financing bikes on loan should not come with hidden charges. Understanding the processing fees and other charges associated with the bike loan lets you make informed decisions, potentially saving money.

The most important charge you must be aware of is the processing fee. It is a one-time charge lenders levy to cover their administrative costs for handling loan applications. These fees vary between lenders based on their fee structures. If the lender charges a processing fee as a percentage of the principal amount, it may be higher for a bigger loan sanction. You may negotiate lower processing charges if you have a decent credit score.

Other than the processing fees, also enquire about prepayment charges, loan cancellation charges, delayed payment charges, EMI bounce penalties, etc. Read the loan agreement carefully before signing to obtain information about these charges and avoid any unpleasant surprises later.

Your dream bike might be beyond your reach due to a lack of finances. However, a bike loan is the best financing option to purchase your favourite two-wheeler. It makes the purchase easier without worrying about paying the entire cost upfront. Explore the bike financing options at Hero FinCorp offering loan amounts of up to Rs 2.5 Lakh, competitive interest rates, and flexible repayment terms. Additionally, keep an eye out for pre-approved loans and fee waivers to save on the loan costs. Moreover, consider the key factors mentioned here to purchase bikes on loan.