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Six Things to consider when applying for a bike loan

by | May 12, 2020 | Automotive, Business

If you want to own a bike and have been delaying the purchase due to a lack of funds, you are in the right place. You no longer need to delay the purchase of your dream bike. You can now choose the bike you want to own and apply for a bike loan to help with the purchase. Do not use your emergency funds or break that fixed deposit. Buy any bike in the country with the loan. Manufacturers introduce new models every other month and it can become difficult to make a choice. The best way to start is by identifying the purpose of borrowing and then making a decision. Consider how you will use the bike and where you will use it, for your commute or for adventures. This will help in making a decision.

Scout the two-wheeler market and shortlist the bikes you are keen to buy. Take a test drive and then make a decision. Once you have made up your mind about the bike you want to own, scout the market for financial institutions that offer a loan for the purchase. 

  1. Eligibility criteria

Every lender will have varying eligibility criteria you need to be aware of. You can compare the same online and then make a borrowing decision. The basic eligibility criteria are:

  • Minimum age requirement of 21
  • Valid driving license
  • A consistent source of income
  1. Documents

If you have a good credit score, your loan application will be approved in no time. You can make an online loan application and submit documents of identity proof, address proof, income proof, two passport-sized photographs, and documents of the bike you want to own. 

  1. Down payment

You will have to make a down payment for the purchase of the bike. Lenders have a minimum amount of down payment requirements. However, if you have excess funds on hand, it is best to make a higher down payment. Once you provide the proof of down payment, the loan will be processed and approved in no time.

  1. Interest rate

Every lender will offer the loan at varying interest rates and you can compare the same online. Low-interest rate means low EMI and low monthly outflows. When you scout the market for lenders, you need to compare the interest rate offered by them. This will help you make the right borrowing decision. 

  1. Repayment

The tenure of the loan is equally important. It will have a direct impact on the EMI amount and monthly outflows. Hence, if the tenure is long, the EMI will be low and if the tenure is short, the EMI amount will be high. You can use the EMI calculator to get a quick EMI estimate. The calculator is available online and you only need to provide the loan amount and tenure. You can change the inputs until you reach an optimal output. The calculator will give you an accurate result of the EMI you will have to pay each month.

  1. Prepayment

Several lenders offer an option of prepayment of the loan. Before you sign on the loan documents, ensure that you are aware of the terms of prepayment. Some lenders charge a fee for prepayment, which you need to be aware of. If you have excess funds on hand and if prepayment is an option, go for it.

Understand the terms and conditions of the loan thoroughly before signing on the dotted line. You can build a strong credit score by making regular EMI payments. The bike loan application is usually approved in 24 to 48 hours.