Things to Know Before Buying First Bike On Loan

Getting a bike is a special moment, whether for daily travel or exciting road trips. The thrill of owning the bike you’ve always wanted is truly special. If you are trying to stick to a budget and don’t want to use your savings all at once for a bike purchase, a bike loan is the solution you need. The loan offers funding without exhausting your savings right away. 

Before deciding, it’s crucial to consider some factors that will help you choose wisely. This post will help you consider the factors necessary for buying your first bike on loan. It will also guide you in creating a financial plan that suits your needs, ensuring a smooth and enjoyable purchasing experience. 

Factors to Consider Before Buying a Bike on a Loan

Here are the factors to consider before taking a loan to purchase a bike:

• Assessing Your Budget

It is crucial to estimate the costs of purchasing and maintaining a bike.  This will give you an idea of the loan amount you require. You should calculate the EMI and check whether it fits within your income. You should also take into account the additional expenses like insurance, fuel, and maintenance. A clear understanding of the costs involved helps you plan better and own a bike without financial strain.

• Credit Score Analysis

Make a note to check your credit score before applying for a bike loan, as it plays a vital role in loan approval and the interest rate offered by lenders. This number reflects your creditworthiness and financial management skills. A higher credit score increases your chances of securing a loan at a favourable interest rate. In contrast, a lower credit score may result in higher rates or even loan denial.

• Know About the Eligibility Criteria 

Any lender approves a bike loan when the borrower meets a set of requirements set by them. Although these can differ between lenders, there are some criteria that most financial institutions look for in borrowers. These are:

• Be an Indian citizen. 
• You must be over 18 years of age to apply for a loan. 
• Having a stable source of income is essential whether you are a salaried employee or running your own business.   
• A good credit score of 750 and above is required. 

• Prepare Necessary Paperwork

When applying for a bike loan, you must submit standard documents to verify your name, address, and financial situation. Having these ready can expedite the approval process:

• Aadhaar Card, Passport, PAN Card, or Voter ID as proof of identification. 
• Utility bills or rental agreements as proof of address. 
• Recent salary statements or bank statements as proof of income.  
• Latest passport-sized photographs.   

• Compare Lenders

Lenders may offer different interest rates, and even a small difference can greatly impact the overall cost of your loan. Comparing rates from several banks is a smart way to secure favorable rates. Your salary, loan amount, credit score, and other considerations affect your interest rate.  

• EMI Structure 

The monthly payments required to repay the loan are called Equated Monthly Installments or EMIs. You can use a Two Wheeler Loan calculator to get clarity on your monthly EMIs. Simply input the loan amount, tenure, and interest rate to calculate your EMIs instantly. Estimating your EMI in advance helps you understand how much you need to pay each month. It helps you plan your finances better, ensuring the loan fits your budget and avoids financial stress. It also helps you choose a repayment plan that aligns with your financial goals. You may adjust the figures using the EMI calculator to create a payment plan that suits your financial situation.

• Additional Loan Charges

Remember to inquire about any additional loan charges beforehand to avoid any surprises later. The major charges may include loan processing fees and penalties for late payments, which may increase your total expenses. Some lenders may impose a fee if you decide to repay the loan before the agreed tenure. Make sure to review the loan terms carefully to understand all costs and fees associated with the loan. 

• Loan Tenure 

The duration of your loan impacts both your repayments and the total interest you will pay in the long run. A shorter tenure will result in lower interest rates but higher monthly installments. Conversely, a longer tenure will result in smaller monthly payments over time but increases the overall interest paid.   

• Check Promotional Offers

Many lenders provide special discounts, lower interest rates, or added benefits like free insurance or cashback for a limited period. These offers can significantly reduce your overall loan cost or improve the terms of the loan, making it more affordable. Take time to do in-depth research and choose a lender that offers attractive terms and competitive deals on your loan.

Conclusion 

Getting your bike through a loan can be fulfilling if you strategize effectively from the start. Begin by assessing your budget and credit score and familiarising yourself with the lender requirements for eligibility while getting all the paperwork in order.  

Take time to carefully compare loan options to ensure you get preferred interest rates and favorable terms. Use the Two Wheeler Loan calculator to estimate your monthly payments and choose a repayment plan that fits within your financial goals. Lastly, pick a repayment duration that works for you and look into any perks lenders provide to optimize costs. Planning ahead and making informed decisions can secure your dream bike with minimal financial strain, ensuring a smooth and enjoyable ownership experience.