You will find that the loan application process for two-wheelers is quite simple and easy as a lesser number of documents are required. If the lender approves the loan, it is possible that you may get it within the same day. There are several two-wheeler finance companies that provide loans but the loan terms and eligibility criteria may differ. So, how would you decide on the best two wheeler loan? There are certain factors that you should consider before finalising a loan. This is important as you may save a significant amount of money in the process. Some of the factors are comfortable terms and conditions, low-interest rates, flexible repayment period, etc. Read on to know about them in detail.
You should particularly note the following while selecting a two-wheeler loan:
- Conduct research
Suppose you want to select a lender who offers two-wheeler loans. Go through the online portals of different lenders based on your location and check their terms and conditions, interest rates and maximum loan amount that they would offer. Also, check the various fees and charges that are associated with the loans. Use an online two-wheeler finance EMI (Equated Monthly Instalment) calculator to compare the loan EMI between different financial institutions.
- Hidden clauses
Sometimes lenders have hidden clauses that can affect your loan amount like processing fees, other charges, etc. Check for these things before you submit your loan application as they can bring difficulties once you avail the loan.
- Loan amount
Many finance companies would offer two-wheeler loans up to an amount of 100% of the two-wheeler price while others would offer 90-95% or lesser. This is the Loan to Value (LTV) ratio. It depends on the type of two-wheeler that you are buying like a brand-new or used bike. Some lenders would additionally consider your profile, source of income, credit history, etc. Compare the LTV ratio by different lenders and choose one that offers the maximum loan amount as per the bike price. However, you need to check whether the EMI amount is okay for you when you finalise the loan amount. You should be able to pay it without difficulty. Do not go for a higher loan amount than you require or buy a more expensive bike even if the lender urges you to. It may be difficult for you to pay back.
- Interest rate
Check the interest rate that the lenders are charging. It would depend on your age, income, employment status, credit history, etc. Select a lender who offers an interest rate that would be affordable for you. The Annual Percentage Rate (APR) will also vary between lenders. It includes the costs and expenses related to the loan.
- Special offers
You will find two-wheeler finance companies offering attractive discounts and offers during festive seasons, particular periods like monsoons, winters, etc. The offers include low interest rates, zero down payments, no processing fees, and 100% financing. If you are an existing client, your lender may give you additional benefits compared to new applicants. This way you can save more on your EMIs and offers are a crucial factor to decide on the best two wheeler loan.
- Repayment option
You will find that the longer is the duration of repayment, the higher would be the interest rate. Choose a lender who would allow flexible EMIs, so that you can repay back the loan quickly without paying a higher amount as interest on the loan. There can be other expenses like part prepayment charges, foreclosures charges, loan rescheduling charges, etc. Remember to check these as well.
- EMI amount
Know the EMI amount in advance with a two wheeler EMI calculator. It is an online tool that would display the fixed amount consisting of the principal and interest on the loan that you have to pay every month. You can modify the duration of payment in a way that would be comfortable for you. Just modify the options of loan tenure on the calculator.
The EMI calculator is available on a lender’s website and you do not have to log in or create an account to access it. The reasons why you should use the calculator include the following:
- You can avoid manual calculations
Manual calculations take a lot of time and there is a high chance that you would make mistakes. The EMI calculator is an automatic tool for making difficult calculations and you would always get the correct results. It would also take the least amount of time for calculations.
- Easy to use
The calculator is easy to use and is a simple tool. You just have to put in the numerical values of principal, interest, and duration of the loan to get the EMI. There is no complex method involved.
- Secure method of calculation
It keeps your personal details safe as the two-wheeler EMI calculator does not store your identity. There is no sharing of personal details. So, it is safe to use.
- Easy to access
You can use it anywhere and at your preferred time with a mobile device. Access it from your smartphone, laptop, tablet, or desktop with a stable internet connection.
- Affordability check
You can decide whether you would be able to repay a certain amount every month after availing of a two-wheeler loan. If it seems difficult, you can adjust the values to arrive at an amount that you can easily pay besides maintaining your other expenses. If you miss an instalment, you may have to pay a late payment charge and it would also affect your credit score. So, the calculator helps you to decide on the amount of loan that you should borrow.
Before selecting a lender and finalising the loan amount, you should consider certain factors that can affect the EMI amount and terms of repayment. There are many two-wheeler finance companies but you should go for those who offer loans with easy terms and conditions. It would then be easy for you to pay back without having any financial stress and choose the best two wheeler loan among several offers that you may receive from lenders.