Purchasing a bike in one payment may only be financially prudent with a tight budget. Having said that, the most suitable option for purchasing a bike is to take out a bike loan. A bike loan will help you go for your dream bike and not settle for anything less.
However, several factors need to be considered before taking out a bike loan. Read along to learn more.
Also read: How to get minimum-amount loans as low as Rs 10000?
Factors to Consider Before Going for a Bike Loan
Here are some major factors that you need to consider before opting for a bike loan:
- Budget
The first and foremost thing is to consider your budget, income, expenses, and repayment capability. You need to analyse how much down payment and the EMIs you can afford. As the EMIs stretch over several years, it is ideal that you also consider your expected future income. - Eligibility Criteria
Every bank has different eligibility criteria for sanctioning a bike loan. Hence, it becomes essential to check the eligibility criteria before taking a bike loan. Lending without the requisite eligibility criteria would mean a sure rejection and a waste of time and energy. - Interest Rate
This is another factor you must consider before taking a bike loan. Interest rates will significantly affect your EMIs and total repayment amount. You should compare interest rates offered by different banks and choose the one that is on the lower side.A lower interest rate means lower EMIs, and vice versa. One way to get lower-interest loans is to maintain a high Cibil score, preferably over 750. - Loan Tenure
Loan tenure refers to repayment time, i.e., how many months you have to repay the money to the bank. Always compare the tenure offered by different banks before taking a bike loan.People in the lower income band should go for a longer tenure as EMIs will be lower. On the other hand, people with higher disposable income can go for short tenures and bigger EMIs.
Also read: 5 Things To Keep In Mind When Getting A Home Loan In India
- Processing Fees
Banks levies this fee for sanctioning and disbursing bike loans. One major factor you need to check is the processing fees different banks charge. The higher the processing fee, the higher the total repayment amount, and vice versa. Processing fees increase the cost of loans and, therefore, become an important factor when taking a bike loan. - Repayment Options
Some banks may allow bike owners a fixed EMI plan, whereas others can offer flexible payment mechanisms. A flexible payment system allows one to pay more or less according to one’s financial capabilities.Bike owners can pay more in months when they have a higher income and less in months when their income is on the lower side. Hence, one should always check the type of repayment option banks allow before going ahead with the loan.
How Can You Easily Calculate the Bike Loan EMI?
After considering all the important determinants of a bike loan, the next thing is to calculate the EMI. You can use the digital bike EMI calculator to get an accurate estimate of the monthly payments one needs to make for bike loan repayment.
The digital EMI calculator is a very simple and easy-to-use tool. You just need to enter the loan amount, rate of interest and loan tenure, and the EMI calculator will give you the EMI schedule.
Why is Bike Insurance a Must when Buying a New Bike?
Bike insurance is a necessity in today’s uncertain and risk-prone environment. Accidents, thefts, and irreversible damage from natural calamities like floods and landslides have increased. In light of such developments, bike owners should take two wheeler insurance as soon as possible.
Several lenders may also mandate bike insurance as part of their loan sanction process. This protective shield will secure the bike owner’s and the lender’s investments.
A bike loan is a very effective tool for individuals with limited financial resources. Any financial decision involves many variables and situations and is a very big decision for any middle-class family. This article will offer an insightful analysis of the factors to consider before taking a bike loan and will help them make wise decisions.