Have you always wanted to own a two-wheeler? Wanted to feel the convenience it offers? But how do you purchase your desired bike without burning a hole through your savings? Well, applying for a two-wheeler loanis one of the most convenient options.
While applying for a loan, however, you have to consider several costs. The interest rate charged on loan is perhaps the most vital cost and depends on various factors.
Let’s look at some key factors below.
1. Credit score
Your credit score and history are vital determinants of the two-wheeler loan interest rateyou’re eligible for. Your lender will evaluate your CIBIL score, previous loans, and repayment history to ascertain your creditworthiness before approving your loan.
The higher your credit score, the lower is the interest charged. You can also negotiate for favourable interest rates in such a case.
Before giving loan approval, lenders usually check your income level to gauge your repayment ability. If you’re a salaried employee, you’re more likely to get loan approval for a bike because of a steady source of income. But if you don’t earn a fixed amount every month, you may need to show additional income stability proof to secure approval.
In any case, your salary will directly affect the interest rate your lender will charge. You can also use a bike EMI calculatoronline to get an estimate of your EMI payments beforehand and choose a two-wheeler loan plan accordingly.
3. Down payment
Down payment is the amount you’re willing to pay upfront towards purchasing your two-wheeler. Typically, the higher the down payment, the lower is the loan amount and the interest rate.
For instance, if you can afford to put 60% of the bike cost as a down payment, the loan amount you need will be less. So, the lender might agree to offer you a lower interest rate. However, if you have a spotless past record, you can still secure a competitive interest rate for financing your vehicle.
4. Bike model
The type and model of the two-wheeler you intend to purchase also affect the interest rates you’re charged.
When you take a loan for a vehicle, it acts as collateral during the loan period. As a result, loans for best-selling bike models generally come with an affordable interest rate because their resale value is comparatively higher.
Additional Read: 5 Reasons Why Getting a Two-Wheeler is the Need of the Hour
While it may sound odd, your place of residence plays a significant role in deciding your two-wheeler loan interest rates. If you live in a metropolitan city like Delhi or Mumbai, your living expenses are likely higher than if you reside in a Tier-2 city. So, you should be earning accordingly to make up for the expenditure and afford the loan.
Over to you
Have your eyes on your favourite bike but worried your savings aren’t enough? Time to let go of your financial worries with Tata Capital!
We offer affordable loans at reasonable interest rates and flexible EMI options. Avail a loan amount of up to Rs. 3 lakhs or 100% financing of up to Rs. 1.5 lakhs with quick loan processing.
Your dream bike is now a click away! Contact us to know more.