The coronavirus pandemic has changed how we live our daily life in several ways, and one of them is the way we commute.
In an effort to maintain social distancing, many Indians are looking to buy bikes. And with multiple financial institutions offering attractive bike loans, purchasing your dream model on EMI is no longer impossible. You do not need to dip into your savings to make the purchase these days. All you have to do is keep the following tips in mind, do your own research about different lenders, and compare their offerings, before you make a decision.
Top 6 tips to buy a bike on EMI
- Negotiate with the dealer – Though you do not need to pay for the bike in one go, as you are taking a loan, try and negotiate the price as much as possible. This is because, the lower the price, the lower will be your down payment. A smaller loan amount also means a lower interest rate and you can pay it back quicker. Research well and compare different dealers first.
- Check your eligibility
Usually, you do not need to pledge any collateral to avail a bike loan. The bike itself is hypothecated until you pay off the entire loan. However, a decent credit score is required by most financial institutions. This is generally calculated based on your past repayment history. In case you are applying for a loan for the first time, the score will be calculated based on your ability and willingness to repay. Lenders go through your bank statements, salary slips, job or business stability, and other KYC documents to gauge that. You can visit a lender’s website to go through the eligibility criteria and the list of documents required to avoid facing loan application rejection.
- Choose wisely from various lenders
Since many financial institutions provide bike loans these days, you should compare wisely before choosing one. So, compare the interest rates offered by at least 3 or 4 lenders, their processing fees, and repayment options. Many leading financial institutions let you pay the EMIs through cash, ECS, PDS and NACH.
Check the LTV or loan to value ratio as well. If it is low, you will have to shell out more as down payment. Find out how much time they take to process and approve a loan request. Check for any special offers or schemes that can make it more affordable for you.
Some financial institutions may offer loan insurance too, which may help you in meeting any kind of unexpected contingencies.
- Be careful about loan tenure
Many lenders in India offer flexible loan tenures nowadays. And if you choose a long tenure, the interest rate charged is low, and vice versa. Naturally, the EMI will be small too. So, you might be tempted to choose a long tenure. However, remember that, with a long tenure, though you have to pay less every month, the total interest cost you will end up paying is much more than a short tenure. So, make a decision wisely based on your repayment capacity and requirements. You can also use the bike EMI calculator provided on the websites of different lenders, and enter details like tenure, interest rate and loan amount to calculate the EMI. This will help you budget accordingly.
- Go for lenders that allow online application
Since venturing outside unnecessarily might put you at the risk of contracting the coronavirus, try and go for a financial institution that enables online loan application. You will need to upload the soft copies of relevant documents and will not have to maintain any paperwork. This will make things super convenient for you, and it will also be easy to track the loan. You will get all notifications and alerts through emails or texts, and you can pay EMIs comfortably from your home. Moreover, many lenders offer dedicated apps to track loans and download statements easily. Through these, you can prepay the loan too, without stepping outside.
- Leave no room for doubt
Before applying for the bike loan finally, make sure you have all the essential documents in place, to avoid any last-minute hassle. Go through the terms and conditions carefully (these might vary from lender to lender) and watch out for hidden charges. In case of any doubt, call the financial institution’s customer care and get them clarified.
Concluding thoughts
All in all, availing a bike loan is easy if you keep the above 6 tips in mind. Comparing loan features and lenders, checking your eligibility carefully, and having all the documents in place can help you land a good deal and bring home the bike you have always wanted.
