India is the world’s largest two-wheeler market, which was further (to some extent) boosted by the need for private transport solutions amidst the pandemic. While bikes are significantly cheaper than cars, many Indian could not shell out the increased on-road price of bikes after the hikes from BS6 norms kicked in. This is when buying bike on EMI started to get popular among people.
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What to look for:
Interest rates:
- Like all loans, the lender will offer the loan amount based on monthly interest rates. The loan amount, in addition to the monthly interest, will be paid as EMI.
- This is why it is essential to compare the interest rates. Furthermore, some bike manufacturers have their own bike financing or loan plans.
This can come with some extra terms and conditions, as the manufacturer may include the servicing details of the two-wheeler for determining interest rates.
Processing Fee:
- Most bike loans will also carry a processing fee of around 2% or less.
- In some cases, the processing fee can also be negotiated.
100% Financing:
- Some loan providers or the two-wheeler manufacturer itself offer zero-down payment loans, where the buyer pays no initial amount to get the bike. These loans will obviously carry more interests with higher monthly EMI.
- Hence, it is advisable to go for any down-payment plan as per the customer’s repayment capacity.
Eligibility:
Bike loans also requires the customer to be meet some basic requirements:
- Applicants should be a resident of a house for at least 1 year. This is to show proof of residential stability. The requirement of duration for residing, may vary from lender to lender.
- Age of the buyer while applying for the loan should be 18 – 65 year old.
- Applicants should have a stable occupation and provide last two-years of income tax returns.
- CIBIL score.
- Documents including: Identity Proof, Address Proof, Tax return slips, etc.
Loan Calculation:
- The bike loan depends upon:
- Bike’s cost (on-road)
- CIBIL score
- Repayment capacity
EMI Plans:
- EMI plans are available with multiple monthly payable amounts. The tenure and amount of the monthly payables will also determine the interest rate.
Ownership:
- In most cases, the ownership of the bike will remain to the customer during the loan. However, very few lenders may put clauses like proper and regular servicing and may have restrictions on modifications on the bike.
Effect of Accidents on the loan:
- This is important to look for. In certain cases, the bike loan might get a hike on the monthly EMIs if the bike is involved in an accident.
Resell:
- In order to resell the bike, the customer needs to pay back the entire loan amount with interest before the title of ownership can be transferred to someone else.
EMI Payment’s effect on Credit Score:
- Regular EMI payments without delays will positively affect the credit score for future loans.
After the last EMI:
- After the last EMI is paid, the No-Objection Certificate (NOC) and NDC (No-Due Certificate) needs to be procured from the lender. The borrower/buyer should also avail the EMI statement from the lender.
