Planning to buy a two-wheeler on loan? There are several two-wheeler finance companies besides banks that provide loans. There is minimal requirement of documents and once the lender approves the loan, you may get it within the same day. While selecting a lender, look for comfortable terms and conditions like low interest rates, flexible repayment period, etc. You may have to do some research online or offline to compare between what the lenders are willing to offer on a loan. Read on to know about certain factors that you should consider while applying for a two wheeler loan.
The things that you should take care of while applying for a two-wheeler loan include:
Comparison between types of two-wheeler loans
Go through the online portals of different lenders and check their terms and conditions, 2 wheeler loan interest rate 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 calculator to compare the loan EMI between different lenders. You can also do some offline research by visiting lenders physically.
Hidden terms and conditions
Sometimes lenders have hidden clauses that can affect your two wheeler loan amount like processing fees, other charges, etc. Check for these things before you submit your loan application as they can lead to additional costs once you start the repayment.
Loan to Value (LTV) ratio
Many lenders offer loans up to an amount of 100% of the two-wheeler price while others would offer 90-95% or lesser. This known as Loan to Value (LTV) ratio. It depends on the type of two-wheeler that you are buying like brand-new or 2nd hand. Some lenders would additionally consider your source of income, credit history, etc. Compare the LTV ratio by different lenders and choose one who offers the maximum loan amount. Check whether the EMI amount is okay for you when you finalise the loan amount. You should be able to repay it without difficulty. Do not go for higher loan amount than you require even if the lender urges you to.
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 the least interest rate. It would help you to save more. The Annual Percentage Rate (APR) includes the costs and expenses related to the loan. It will also vary between lenders.
Offers and discounts
Lenders offer 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.
Flexibility of tenure/ loan term
The tenure of loan repayment will determine the EMI amount that you have to pay every month. Check whether the loan term is flexible enough to accommodate your EMIs and it does not become an additional burden. Based on these conditions, you should choose the lender.
Documents required by the lender
Once you have selected the lender, check the eligibility and documents required by the lender. The lenders require the documents as proof of eligibility. You may choose a lender who does not have very stringent requirement regarding documents as these would lead to delay in loan processing.
A longer duration of repayment will lead to higher interest rates as the lenders find long repayment period to be risky due to default. 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. You should check them as well.
You should consider certain factors associated with a two wheeler loan before you finalise a lender, arrange the documents and apply for a two-wheeler loan. There are various lenders but you should be careful to choose one based on the loan terms that he is offering. Interest rates, repayment options, hidden charges, etc. are some of the things that you should check before availing a loan and repay back comfortably afterwards.