If you’re tired of increasing traffic, surging cab prices, or fed-up from waiting for the bus, don’t get worked up! It’s a sign telling you to think about getting your own motorcycle. A spanking new bike that’ll let you swerve around the traffic and save a lot of time.
So if you’re thinking of purchasing a bike – either for convenience or for leisure – getting a bike loan is a good idea, especially if you’re running short on cash. Bike finance helps you split up your bike’s amount into small, manageable monthly instalments, allowing you to own your dream machine without denting your savings.
However, before you start checking your two-wheeler loan eligibility, it’s essential that you know the types of loans available in the market, and which one fits your preferences the best.
Essentially, two-wheeler loans come in two types – secured and unsecured loans.
What is a secured loan?
Simply put, a secured loan is protected by an asset. It can be anything, from your home to your car, or in this case, your bike. Usually, the item, which is purchased using a loan, is used as collateral or guarantee. Other items such as personal property, stocks, or fixed deposits can also be used as security.
Most motorcycle loans are secured with your bike as the collateral. However, if you wish that your motorcycle is purchased under your name, and not the lender’s, you can put up other assets as collateral as well.
What is an unsecured loan?
Unsecured loans are the opposite of secured loans. This financing option includes credit cards, student loans, and personal loans. Forwarding an unsecured loan is a tad risky for the lender as there’s lack of security. Hence, unsecured loans for motorcycles are provided at a relatively higher bike loan interest rate.
Additional Read: Things to Know While Comparing Two-Wheeler Loans
Which one should I opt for?
The right choice depends on several factors. If you wish to have a lower two-wheeler loan interest rate and have an asset that you can pledge as collateral, a secured loan might be the right fit for you. Also, since you’re providing an asset as a security, the chances of loan approval are high and might get you a higher loan amount as well. Best part? You can get a loan without having to worry about your credit history.
Having said that, your credit history isn’t completely ignored. If you have a fairly low credit score, you might still get a loan, but at considerably higher interest rates.
Unsecured loans are relatively less straining than secured loans, as you don’t have to worry about your assets constantly. Since unsecured loans are forwarded based on your credit history, it’s essential to maintain a decent credit score (anywhere between 700 and 900). So if you’re not comfortable with putting up your assets, and aren’t bothered by a slightly higher 2-wheeler loan interest rate, an unsecured loan is the way to go.
Additional Read: CIBIL Score for Vehicle Loans
In the end
Looking for a way to finance your dream bike? Well, Tata Capital is here to help you! Apply for our affordable two-wheeler loans today, and get fast disbursals, competitive interest rates, and a customizable tenure. What’s more, you can also use our bike loan EMI calculator to plan your repayment schedule.
So what’re you waiting for? Visit our website to check out our bike finance offerings today!