Many times, financial advisors and financial experts suggest two-wheeler buyers to apply for a personal loan to buy that dream bike of theirs. You may wonder if it is actually a good idea. The truth is applying for a two-wheeler loan through a personal loan makes a lot of sense. There are many reasons that prove that taking a personal loan to buy a two-wheeler is a great financial step. Two-wheelers are one of the most preferred modes of transport in the country as they are light, quick, and helps users in saving a lot of time while going from one place to another.
In case you do not have enough funds to buy a new bike or in case you do not want to use your savings for your two-wheeler purchase, then you can apply for a loan to make the purchase conveniently. You may take a two-wheeler loan or a personal loan to buy a new scooter or motorcycle. Both the types of loans are offered by banks as well as non-banking financial corporations in India.
When you apply for a personal loan, you can enjoy the benefits of having an unsecured loan. This indicates that you do not have to furnish any collateral or security while applying for the loan. Moreover, the interest rates charged for personal loans are pretty economical. Hence, your overall loan expenses for owning a bike will be low. With proper financial planning, you can be assured that you will be able to manage your other monthly expenses. The most attractive feature of a personal loan is that you do not have to mention to your lender that you are purchasing a bike with the loan. This is because one does not have to specify the purpose for taking a personal loan.
Whether you are interested in buying a premium bike, a daily-commuter scooter, a sports bike or an adventure bike, you can apply for a personal loan to purchase it. Also, whether you want a brand new two-wheeler or a used two-wheeler, you can take a personal loan.
Top 8 reasons to purchase a two-wheeler with a personal loan
- 100% on-road price: When you take a personal loan to buy a new two-wheeler, you can enjoy 100% financing of the on-road price! This is a great boon as most lenders offer only up to 80% of financing. This way, you do not have to worry about making down-payments for your loan. If you plan to buy a vehicle with a two-wheeler loan, you will mandatorily have to make a certain down-payment.
- No need for making down payment: When you take a two-wheeler, you will definitely need to make a down-payment. You will be required to decide the down-payment after having a negotiation with your lender. Most often, they give financing only for 80 to 90% of the on-road price of the vehicle On the other hand, when you take a personal loan to purchase a bike, you will not be asked to make any down-payment. You can get full financing for your bike's price.
- Take a loan even if you do not have any credit history: Generally, one buys his or her first bike right after college or when they get their first job. During such times, one may not have any credit history as the person would not have applied for any form of credit till then. While applying for a two-wheeler loan, your lender would most certainly ask for details about your credit history or for a CIBIL credit score. Without good credit history, you may not be eligible for a bike loan. You could wait for a few years, build a decent credit score, and then apply for a two-wheeler loan. Or, you could just apply for a personal loan. Lenders ask for CIBIL scores even for personal loan applications. However, certain lenders may agree to provide you with a personal loan after checking your income details, employer's details, employment status, investments, etc. If your lender is satisfied with your financial profile and convinced that you will be able to repay the personal loan on time, then your personal loan application will most likely be accepted. You can then use it to buy the vehicle of your choice.
- No need for hypothecation of two-wheeler: Generally, when you use a two-wheeler loan to purchase a bike, the bike will be hypothecated. This means that you will have to furnish the ownership of your new bike with your bank or NBFC. Only after you complete making the full payment, the ownership of the bike will be transferred to your name. For hypothecation of bike, you will be required to go through a long documentation process at the Regional Transport Office (RTO). You will be required to spend a high amount on this process. After you pay off the two-wheeler loan completely, you will mandatorily have to get a no-objection certificate (NOC) from your lender. The NOC charges are generally pretty high. Instead, if you simply take a personal loan, you would not have to worry about any tedious hypothecation process or additional charges. You will get to save money and time by going for this simpler option to buy your new vehicle. With a personal loan, you will be required to pay only a processing fee, which is usually up to 2% of the personal loan amount. This fee can differ from lender to lender.
- Low interest rates: When you choose a personal loan for buying your scooter, the rate of interest will typically be low. The interest rates for personal loans in the country generally start from 10.85%. This is lesser than two-wheeler loan interest rates. The rate of interest for two-wheelers usually starts from 11% to 12%. The interest rate for your bike loan will be determined by your income, loan amount required, loan tenure, your two-wheeler specifications, age of the vehicle, etc. If any of the factors does not meet the lender's eligibility criteria, you may be charged with a very high interest rate. Interest plays a significant role in your overall loan expenses. If your interest rate is low, then your loan expense will be low as your equated monthly installments (EMIs) will be low. On the other hand, if your rate of interest is high, then your loan expenses will be high due to high EMIs. If you are looking to borrow an affordable loan to purchase your dream bike, a personal loan does make sense. In this case, the age of your vehicle and the bike specifications would not even matter.
- Simpler eligibility criteria for personal loans: The eligibility criteria for personal loans are simpler than that of two-wheeler loans. If your monthly income is at least Rs.20,000, then you are good to go. For a two-wheeler loan, the minimum income criterion is slightly higher. With a decent monthly income, you can manage your monthly installment amounts effortlessly when you take a personal loan. Hence, with an affordable personal loan, you can buy that awesome bike that you have been checking out everyday in your nearest bike showroom or online.
- Smaller tenures for personal loans: When you choose a personal loan, you can enjoy smaller tenures. Tenures for personal loans usually range from 6 months to 5 years. When you have a shorter tenure, you will not be forced to pay interest for too many months. You can clear off your personal loan quickly by being a little financially disciplined. This way, you save extensively when you choose a shorter tenure with lesser interest to pay.
You can now decide if you want a two-wheeler loan or a personal loan for purchasing your motorcycle or scooter. You can apply for a personal loan online or offline. To apply online, you will have to visit official websites of lenders or third-party financial websites. You can compare personal loan interest rate, processing fees, penalties, and other features on the internet itself. Once you make a decision, you apply for a loan, and then buy your bike. To apply offline, you can visit a physical branch of your lender and an executive will provide you with the details and help you apply.
You can keep all your documents for proof ready to have a quick and smooth loan application process. Most lenders and financial web portals allow borrowers to upload documents online. This is great as it promotes simplified, paperless transactions. Apply for a reliable personal loan that suits your requirements, preferences, and financial condition. Once it gets approved and disbursed, you can purchase your marvellous bike and have a great time with beautiful riding experiences.
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