A comprehensive part of India’s working class spends an extensive portion of their time and income to travel from home to work. According to some recent research, on average, an individual generally spends nearly 6% of his/her earning daily on the work-related journey. Another analysis conducted in 2008 says a mediocre person spends almost 45 minutes of his/her life daily by travelling or returning home. From that time, the number only increased.
This is where a bike or scooter can act as a godsend because commuting on a two-wheeler redundantly reduce the excess time involved in travelling. Hence, you can save more time and spend with your family. Especially if your employment is associated with sales and marketing, having a two-wheeler will enable you to visit more clients, giving you a better opportunity to increase earning. In this case, bike finance in India can help you get a bike or scooter at an affordable rate of interest and convenient EMIs.
However, before you apply for a bike loan, let us introduce you to several factors that can highly affect your loan application and interest rates if not paid attention to correctly.
Factors affect your two-wheeler interest rates
The emergence of bike loans has made getting a two-wheeler pretty affordable, convenient and easy to purchase. This hassle-free financing product comes with lucrative interest rates and flexibility for you to pay off the two-wheeler price in easy instalments.
However, if you choose a finance option with an unfavourable rate of interest, it will not benefit you in any regard. So, before you apply for a two-wheeler loan, it is imperative for you to understand the factors that can affect your interest rate.
Down Payment
Down payment is a part of the bike’s entire value that a buyer can pay directly at the time of purchase, and it excludes the loan amount. If you are able to pay off a higher amount of your bike’s price, for instance, 50-70% of the total value, you can enjoy a cheaper rate of interest.
Applicant’s age
The age of the applicant can influence the rate of interest to an extent. If you are close to your retirement period, you might not hold the intention to pay the outstanding loan with excessive interest rates, but you have to. In these cases, your consideration of getting bike finance can cost you extra by increasing the rate of interest for the loan.
Earning
The earning resource of the borrower is one of the most significant factors that play a crucial role in determining the interest rates. However, it varies from bike model to model. For example, if you plan to purchase a superbike, your minimum revenue must be INR 15 lakhs ( for salaried employees) per annum. And, for a self-employed person, the earning must be over INR 5 lakhs per month.
Yet, the scenario might not be exact for regular bikes. Earning a decent amount can easily convince the money lender to offer some relaxation in the interest rates.
Income source
The salary amount or earning source is another vital portion that has a vast impact on determining the interest rates of your two-wheeler loan. For a salaried individual, the process of getting a loan approved is considerably more manageable. The profile of employment works positively in attaining affordable interest rates.
CIBIL or Credit score
Credit Information Bureau India Limited or CIBIL score, prior loan repayments, and pay off plans plays an essential part in deciding your bike loan interest rates. These activities increase or decrease your credit score. Strong credit history will make you eligible to purchase your two-wheeler in every situation.
Residential location
The location where you reside will also help you decide the debt-to-income ratio. The residential location plays an extensively important role in finalising bike loan interest rates. For example, a borrower living in a metropolitan area needs to hold onto a higher-earning source in comparison to a person residing in a two-tier city. Hence, your standard of living, including your lifestyle, also acts as an active element in determining your interest rates.
Watch out for super attractive cheaper interest rates
Many times, several well-reputed finance lending institutions advertise super lucrative bike loan interest rates for the customer. However, the proposal always does not imply you will get the exact offer. The lending companies follow the obligation to provide the advertising offer rate to only 51% of customers (clearly existing customers). Therefore, you must read the loan offers thoroughly, ere you agree to sign the blank line.
Conclusion
Considering the factors that can highly affect your bike finance interest rate is really vital before you proceed with the two-wheeler loan. Besides, going for a well-reputed financial service is also essential as it will make the connected processes hassle-free, less time consuming, and a lot easier.
