Do you wish you could own a two-wheeler? Wanted to experience the ease it provides? But how would you get your dream bike without blowing up your savings account? One of the most useful ones is to apply for a two-wheeler loan.
Let’s take a look at the features that influence the two wheeler loan interest rate.
1. Credit rating
The interest rate on a two-wheeler loan is largely determined by your credit rating and history. Before granting your loan, your lender will look at your Credit rating, past loans, and ability to repay to determine your creditworthiness.
The lower the interest rate, the better your credit score is. In this instance, you can also bargain for lower interest rates.
Lenders typically assess your income level before approving a loan to determine your repayment potential. Because you have a stable source of income, you’re more likely to acquire a loan for a bike if you’re a salaried employee. If you don’t make a set amount of money each month, you may have to demonstrate additional proof of income stability to get approved.
In any case, the interest rate charged by your lender is exactly proportional to your salary. You may also use an online bike EMI calculator to estimate your EMI payments ahead of time and then choose a two-wheeler loan program based on your needs.
3. Make a down payment.
The amount you’re willing to pay in advance for your two-wheeler is referred to as a down payment. Generally speaking, the larger the deposit, the cheaper the loan balance and interest rate.
For example, if you can manage to spend down 60% of the bike’s cost as a deposit, the amount of money you’ll need for a loan will be lower. As a result, the lender may agree to cut your interest rate. Nevertheless, if you have a flawless credit history, you may be able to acquire a reasonable rate of interest on your auto loan.
4. Model of the bicycle
The financing rates you pay are affected by the characteristics and model of the two-wheeler you want to buy.
When you take out loans for a car, it serves as collateral for the duration of the loan. As a result, because their resell value is higher, loans for the most popular bike models usually have a lower interest rate.
5. Your place of residence
While it may seem strange, your residence has a big impact on the interest rates on two-wheeler loans. Your living costs are likely to be higher if you live in a big city like Mumbai or Kolkata than if you live in a Tier II city. As a result, you should be making enough to cover the expenses and repay the loan.
Learn more about the bike loan emi calculator.
Financial organizations decide the rate of interest-based on the applicant’s financial situation and previous history. Financial institutions, on the other hand, offer comfortable and profitable interest rates based on the individual’s profile and historical payback history in an attempt to build long-term customer connections.
However, the rate of interest given is mostly determined by the applicant’s credit score. A bad payment history would result in a higher interest rate being given, and vice versa.
Things to Think About Before Getting a Two-Wheeler Loan
Consider the following points before limiting down your search for a major bank and choose a two-wheeler loan:
- If your credit rating is good, shop around for the best rate of interest from a variety of financial institutions and try to negotiate as much as possible.
- Additional bonuses include no processing fees, a complimentary gold coin on special occasions, free insurance, and so on.
- Loan a sum that you can comfortably repay without jeopardizing your financial situation.
So, what do you have to lose? Get the best rate of interest on your two-wheeler.