Owning a two wheeler is very fulfilling, as it helps manage daily commutes while saving you from the hassles of public transport. However, spending your savings on purchasing a Bike or scooter is not always a good idea, especially when you have other financial obligations. Buying a bike with a Two- wheeler Loan makes better sense for many reasons. These days, you will find many lenders offering low interest Two-wheeler Loan plans. Let us dive deeper into how these loan schemes work and do they actually benefit borrowers.
What is the Bike Loan Interest Rate?
Financing a bike with a low Two-wheeler Loan is beneficial in many ways. Most importantly, it keeps your savings intact and lets you purchase your dream bike without paying its cost upfront. It distributes the bike’s cost into EMIs you must repay across a pre-determined repayment tenure.
Finance companies charge interest on the loan they provide, which increases the bike’s cost by the term end. However, many lending institutions also offer Low Interest Two Wheeler Loan plans that distribute the bike’s cost into EMIs without charging any interest rate.
What is a low Interest Two-wheeler Loan?
low Interest Two-wheeler Loan is a type of EMI facility where you can distribute the bike’s cost into EMIs without paying anything over the purchase price. With such an EMI scheme, you don’t need to pay any additional monthly or annual interest charges. Also known as interest-free loans, zero-cost EMI loans, and no-cost EMI loans, low interest Two-wheeler Loans are available at several lending institutions with varying terms and conditions. However, you must know more about them before choosing these finance options.
Pros and Cons of a low Interest Two Wheeler Loan
Most trustworthy NBFCs offering online bike loans, but they do not offer zero-cost EMI options. That is because these loan options are not as beneficial as they sound. Let’s look at the pros and cons to decide better:
Pros:
- Affordable EMIs: Since the EMIs do not contain the interest component, they are smaller than EMIs with interest, making them easily manageable.
- No Interest Cost: As their name suggests, a no-interest bike loan provider does not charge any interest on bike finance, making it a cost-efficient purchase method.
- Budget-Friendly: Zero-interest bike loans help you stay within budget by spreading the payments over several years of repayment. You can choose a tenure with EMIs that suits your monthly budget.
- Convenience: These are convenient financial sources to purchase the cheapest scooter in India or a high-value bike without paying its cost upfront or anything extra as interest.
Cons:
- Limited Access to Funding: Not all lending institutions and bike retailers supportlow interest Two-wheeler Loan options, limiting your access to funding as a buyer.
- Stricter Eligibility and Credit Score Requirements: Since these loans have a low-profit margin for the lenders, they have more stringent eligibility and credit score requirements from the borrowers.
- Processing Charges: Although lenders do not charge any interest rate, you must pay the processing fee and other charges that add to the bike’s cost.
- Complex Terms & Conditions: No-cost EMI loans have complex terms and conditions you may not fully understand. Read the loan document carefully to understand any additional or hidden charges clearly.
A low interest Two-wheeler Loan can benefit those looking to purchase an expensive bike and distribute its cost in EMIs. However, you must carefully understand the loan plan’s terms and conditions to make a wise decision.
What to Look for When choosing a low Interest Two-wheeler Loan?
Borrowing a low interest Two-wheeler Loan seems enticing, as it lets you purchase an expensive bike without any immediate strain on your finances. However, you must consider the following factors before opting for this option:
- Assess Your Budget: Evaluate your monthly budget and ensure the EMIs comfortably fit your budget without straining other financial obligations.
- Interest-Free Period: Some lenders offer an interest-free period for a limited time only and charge regular interest rates afterwards. Enquire about this option before finalising a loan deal.
- Bike Value: Enquire if the low interest EMI option is available on a particular bike model only and if it is available for the bike you want to purchase. Some retailers or finance providers may offer these loan options only for select models.
- Credit Rating: Enquire about the lender’s credit score requirement and check yours to see if you fulfil the condition. Also, verify if taking the no-cost EMI option will affect your credit score, as it is a financial commitment you must handle for a few years.
- Prepayment Option: There might be times when you receive surplus funds and want to repay your loan with the amount instead of handling the EMIs. Before borrowing, check the loan plan’s prepayment clauses and the associated charges. With this, you can clear the debt before time and become debt-free.
Difference between an EMI Scheme and a No Cost EMI Plan
To make a better borrowing decision, you must understand the difference between a bike loan EMI scheme and a no-cost EMI plan. Read on to get a better understanding:
| Bike Loan EMI Scheme | Low Interest Two-wheeler Loan |
| EMIs, or Equated Monthly Instalments, are payment plans that divide the bike’s total cost into smaller monthly payments with interest over a pre-determined loan tenure. | A no-cost EMI plan is a zero-interest instalment scheme that lets you pay the bike’s price in installments without paying any extra interest. |
| Since interest charges apply to the EMIs, the bikes become more expensive in the long run. | The bike’s cost remains the same because this loan plan does not charge any additional interest. |
| Many credit card and finance companies offer bike loans at competitive interest rates. | No-cost EMI plans are exclusive offers that only a few brands, retailers, or finance providers offer, usually only for limited periods. |
Do you plan to purchase a bike on EMIs? Refrain from getting lured with the low interest Two-wheeler Loan plans. Research thoroughly, read the terms and conditions carefully, and know the pros and cons before making a final decision. Approach the best NBFC for applying online bike loan plan and get the required funding at nominal interest rates.
The post Which Company Is the Best Loan Provider for a Two-Wheeler at a Low Interest Rate? appeared first on WTM - Technology, Business, Finance, Digital Marketing.
