A Complete Guide to Getting a Bike Loan

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If finances are in the way of purchasing your dream bike, we’ve got some good news for you! Nowadays, many financial institutions offer bike loans at affordable rates of interest. These loans require minimal documentation and you can start with the application process from the comfort of your home. 

Bike loans are one of the most common types of loans that Indians take, given how simple and straightforward the application process is. However, for first-time borrowers, the entire exercise can seem a little daunting. There are alot of points that we need to take care of when applying for a bike loan. Bike loan interest rate, monthly EMI that you need to pay and the total tenure. In this article, we’ll go over some important points to keep in mind before getting started with your bike loan application. 

Understanding the Basics 

If this is your first time taking a bike loan or any loan for that matter, then chances are you might be a little confused about the terminologies being used. The first step would be to understand these terms clearly so that you’re not overwhelmed and can make well-informed decisions. Here are some terms that you might come across: 

  1. Loan Amount 

The loan amount, also known as the principal amount, refers to the quantum of loan that you take. This will generally be your bike’s total cost, after adjusting for any down payment that you make. Depending on your eligibility, you might be expected to make a down payment of anywhere from 0% to 30% of the bike’s value. 

  1. Bike Loan Eligibility

All lending partners have a set eligibility criteria for bike loans. In order to qualify for a bike loan, you must meet these eligibility parameters. While the eligibility criteria may differ from one lender to another, here’s a basic eligibility criteria list to help you get started: 

  • Age: 21 to 60 years of age
  • Employment Status: salaried employee or self-employed (must have a regular source of income) 
  • Income Level: Monthly income of at least ₹10,000 

Please note that this list is not exhaustive and is only for reference purposes. Many lenders will also look into your credit score and credit history. 

  1. Equated Monthly Installment (EMI) 

An EMI is the amount that you will need to pay every month towards your bike loan repayment. This amount will be a combination of the loan amount and the interest accrued. Your EMI amount will depend on your loan amount, the interest rate and your loan period.

As a general rule, make sure that your EMI amount is not more than 30% to 40% of your monthly income. 

  1. Associated Fees and Charges 

There are a number of fees and charges associated with taking a bike loan.  Here are some examples – loan processing fees, stamp duty, documentation fees, PPD charges and RTO charges. 

Depending on the loan provider you choose, these fees may vary. Though these charges may seem inconsequential in the beginning, they can quickly add up. So, it’s important to be aware of these charges and avoid them as much as you can. 

If you have a good relationship with your loan provider or have a high credit score, you can consider negotiating with your loan provider regarding these charges. Sometimes, you can get a discount on these charges or even a total waiver if you’re lucky!

So, always be sure to read the find print and talk to your lending partner before making a decision. 

Planning for your Bike Loan 

The importance of planning before making any financial decision cannot be overstated. Here are some simple things to keep in mind while planning your bike loan: 

  1. Do your Research

There are a number of different bike loan options available in the market. So, it’s important that you do your research before settling in on a lending partner. This will help you understand the industry standards and make a wise decision. 

Choose a well-reputed lender that offers bike loans at affordable rates of interest. Other things to consider would be prompt service, reduced processing fees, lower down payment amount, etc. 

  1. Check your Eligibility

The first step towards planning your bike loan would be to understand the eligibility criteria. Connect with your lending partner or visit their website to understand their eligibility parameters. If you do qualify, then try and understand the loan amount that you qualify for. 

Sometimes, this amount can be less than what you need. If that’s the case, then you can try negotiating with the lender or get in touch with other lenders. 

You can also consider saving up the remaining amount and putting it down as down payment. This can help you save on interest payments and also reduce your EMI amount. 

  1. Assess your Finances 

Before making any major financial decisions, it’s important that you take a look at your financial position. You can start by looking at your monthly income and expenses to understand if you have room to make EMI payments. 

Assessing your financial situation will also help you recognise any excess funds that you can allocate towards your down payment. 

 If your budget can accommodate monthly repayments, then assess how much you can afford to contribute towards your EMIs. This will help you choose your loan amount and loan tenure wisely. 

  1. Create a Repayment Plan 

A good repayment plan is one that suits your needs. Adjusting your loan repayment tenure can help you lower or increase your EMI amount. A high EMI amount can help you pay off your loan faster and can also help you save on interest payments. However, taking on a large EMI is not advisable as it increases your chances of defaulting. Defaulting on loan repayments is a stressful and expensive process that is best avoided. 

On the other hand, if your EMI amount is too low, then it will end up costing you in interest payments. This is not a good practice either, particularly if you can afford to make larger contributions towards your bike loan repayment. 

So, make a detailed repayment plan that factors in your current and future financial positions and goals. 

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My name is Aman, I am a Professional Blogger and I have 8 years of Experience in Education, Sports, Technology, Lifestyle, Mythology, Games & SEO.

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