To break or not to break savings? That is always the question when buying a bike. But depleting all your hard-earned money in a single go is never a wise move. You need to have enough funds for unexpected expenses and emergency needs. Instead, take a personal loan to bring home your dream pair of wheels.
Now, you may be thinking, why not go for a two-wheeler loan only? Well, in the personal loan vs two-wheeler loantussle, the former is almost always the better choice. Here are five reasons why.
1. No down payment
Yes, you don’t owe a down payment or collateral to the lender. Unlike a two-wheeler loan, where you may have to provide 15% to 20% of the bike cost as a down payment. With personal finance, however, you get full financing of the bike’s on-road price. This can come as a blessing if you don’t have the means to arrange funds for a down payment.
2. Economical interest rates
Unlike a two-wheeler loan, personal loan interest rates are not charged based on the bike’s segment or specifications. Whether you purchase a superbike or a Scooty, lenders decide the interest rate based on your credit profile. So if you boast of a high credit score, you may get a more competitive rate and sign a more affordable loan deal.
3. Free of hypothecation
Hypothecation means your asset will remain under the ownership of the lender till the loan repayment is complete. When you take a two-wheeler loan, you must hypothecate your bike at the Regional Transport Office. It is often a tedious process and involves a substantial fee. But that’s not all. You will also need to go through a similar process to remove the hypothecation and gain full ownership of the bike later.
With personal finance, however, you pay only a nominal processing fee and get complete ownership from the get-go.
4. 100% financing
As mentioned previously, you can finance 100% of the bike cost using personal credit. On the other hand, you may have to shell out 15% to 25% of the total amount from your pockets in case of a bike loan.
You may think the amount isn’t a lot. But say you’re buying a superbike priced at 2 lakhs and getting only 80% financing, you’ll have to pay Rs. 40, 000 upfront. In such a case, unless you have a savings corpus, you may end up in a pickle.
5. Simple eligibility criteria
Personal loan eligibility criteria comprise factors like age, income, and credit score. Most lenders usually ask you to meet a minimum monthly income requirement, usually between Rs. 15,000 to Rs. 25,000. But the salary slab is typically higher for bike loans. You may even need to present a guarantor to secure the loan if your credit score isn’t good.
Looking for a bike?
If you have set your heart on a bike, why wait any longer? With Tata Capital, get a loan to finance 100% of the bike cost at affordable interest rates. No down payment needed or collateral.
Check out our personal loan EMI calculator and start planning your budget now.