The idea of purchasing a two-wheeler for daily commuting is suitable for office-goers. At the same time, college students will also find motorbikes a good option for daily commuting. The good thing is that motorbikes are affordable, though people may not afford the entire vehicle cost. In such cases, they should look for borrowing options. Fortunately, you can find multiple two-wheeler lenders nowadays. Both banks and well-known financial institutions offer motorbike loans to people who want to purchase motorbikes. Besides two wheeler offers, you must check the availability of the loans for purchasing the vehicle.
When people apply for a loan, they check the repayment interest rate first. A higher interest rate refers to a higher interest on the principal amount. Therefore, you should always search for lenders that offer loans with a low rate of interest. The following section provides a guide to the factors that affect the two-wheeler loan interest rate.
1. Your Monthly Income
An applicant’s monthly income significantly affects the two-wheeler loan interest rate. A person with a high monthly income is more trustworthy to the banks and other lenders. As a result, you may get low-cost deals from such lenders. On the other hand, a low income can become a reason behind a high-interest rate on a two-wheeler loan. Many people with low incomes do not get their loan applications approved.
So, you should focus on increasing your income to a significant amount before applying for a loan. Obtaining a two-wheeler loan will become simpler in such cases. Most importantly, you will get a low-interest rate if you belong to a high-income group.
2. Your Credit Score
A credit score reflects the credit behavior of a person, and the Indian financial industry has a few financial institutions that maintain credit scores. A person with a high credit score indicates that the person has an excellent credit management history. In other words, the person pays the loan EMIs timely. Nevertheless, he also clears all the credit card bills on-time.
Lenders trust people who have an excellent credit history. Therefore, lenders often come up with unique plans to attract such borrowers. For example, lenders may offer loans at a low-interest rate to people with excellent credit scores.
3. Down Payment Amount
The rate of interest also depends on the down payment amount. Every two-wheeler buyer has to make a small down payment. The remaining amount can be sourced through a two-wheeler loan. There is a minimum down payment amount, though there is no maximum limit for the down payment. Many people make a high down payment to reduce the burden of paying monthly EMIs. But, you may have to pay a high loan interest rate if your down payment is high. The banks and other lenders offer two-wheeler loans to make financial gains. Therefore, offering a higher loan amount is profitable from the lender’s perspective.
4. Existing Debt
A person who already has multiple debts may have to pay a high-interest rate on a two-wheeler loan. The banks have a uniform loan interest policy, which helps everyone obtain a loan at a low-interest rate. But, other lenders do not have such uniform lending policies. Such lenders offer low-interest loans to people with no existing debt. You have to pay a high two-wheeler interest rate if you have multiple existing debts.
5. Two-wheeler Model
The vehicle you choose will have an impact on the loan interest rate. For example, choosing a luxury motorbike will lead to a high-interest rate. On the other hand, choosing a standard motorbike will fetch you a two-wheeler loan at a low-interest rate. Therefore, you should choose the vehicle carefully if you have the loan interest rate in mind.
Documents for the Two-Wheeler Loans
Two-wheeler loan applicants should prepare the documents before applying for the loan. Firstly, you need a state-authorized identity card to prove your identity. Secondly, your income documents should be ready when applying for the loan. Typically, the lenders ask last six months’ bank statements to judge and verify the income sources. So these are the most crucial documents for bike loan.
Buying a bike is an excellent decision, as motorbikes give more flexibility and affordability in commuting. On the other hand, purchasing such bikes has become easier due to the availability of motorbike loans.