For many reasons, including avoiding excessive exposure to crowded public transit and relieving you of the burden of making it to the workplace on time, bicycles are a fantastic means of transportation. The cheap availability of two-wheeler loans has made it feasible for people from any socioeconomic background to obtain their dream motorcycle or scooter. Due to many misunderstandings about two-wheeler loans, however, some individuals are still afraid to take advantage of this financial option.
Today, we’ll dispel some of the most popular misconceptions concerning bike loans.
Myths concerning Two-wheeler Loans that you should know about
Only available to those with a high income.
One of the most widespread misconceptions regarding two-wheeler loans is that they are only available to high-income families. On the other hand, the reality is considerably different from the myth. Even if you have a small monthly income of Rs 15,000 or less each month, you may easily qualify. It is widely accessible to people of all economic levels because of the cheap EMI. On the other hand, low-income individuals should choose a bike loan with an extended payback time. A shorter-term is associated with a higher interest rate. An increased monthly installment payment may also signal that you are more likely to default on a loan. The difficulty finally results in the loan being denied.
Interest rates are quite high.
This is yet another widely held misconception concerning bicycle loans. Several individuals believe that since the bike loan is only available for 48 months, lenders must charge higher interest rates to maximize their profits. The reality, on the other hand, is completely different. When a financial institution offers any loan, they are solely concerned with the credit risk involved. When you eliminate a loan to purchase a motorcycle, the lender hypothecates the vehicle against themselves. If you fail to pay your debt, they can sell it at auction to collect their losses. Consequently, bike loans are readily accessible due to the decreased credit risk linked with them.
You can only get financing for a new bicycle.
Two-wheeler loans are shrouded in a slew of urban legends. One of them is that you can only get financing for a new motorcycle. Bikes are far less costly than automobiles, and we all know that purchasing a secondhand bike is significantly less expensive than purchasing a new one. Consequently, the vast majority of people assume that lenders will not accept applications for secondhand motorcycles and other vehicles. However, the reality is that if the used bike that you are acquiring is in excellent shape and has a high resale value, the lender will accept your loan application.
Approval is dependent on your credit score.
This misunderstanding applies to all types of finance products, not only two-wheeler loans, and is widespread. Credit scores are significant for determining eligibility for a bike loan, but they are not the only factor taken into consideration by the lending institution. It is taken into account your income, job stability, and age when assessing your profile. If your credit count is low because you are a first-time applicant or because of incorrect information reported to the credit bureau, the lender will not accept you. Additionally, try adding a co-applicant to your application to get a higher rate.
Your loan is more affordable with a lower interest rate.
When a lender accepts your application for a low-interest loan, many people imagine they will not have to worry about anything else for a long time. This, however, is not the case at all. Additionally, there are additional fees involved with renting a bike. The costs include, among others, processing fees, foreclosure penalties, and half prepayment penalties, to name a few examples. Even though the costs are minimal and are calculated based on the principle amount/principal balance owing, you should consider them.
It’s a hassle to get a bike loan.
Three parties must be involved to get a bike loan: the financial institution, the borrower, and the bicycle store. Because of the large figure of parties involved, many individuals feel that loan processing will take a few weeks or even months to complete. This is yet another urban legend regarding getting a two-wheeler loan. Obtaining a bike loan is as simple as a few mouse clicks. You may quickly begin the loan application process by going online. The documentation necessary for bike loans is likewise limited to a bare minimum. Once you have submitted your information and the lender has properly validated it, the loan will be issued within 48 hours.
To Sum It All Up
Motorcycle loans have earned a reputation for making life a little simpler. Its various advantages, such as cheap interest rates, flexible periods, and a high loan-to-value (LTV), make it an excellent instrument for securing financing for your dream motorcycle or scooter. Before committing to this kind of financing, it’s important to dispel the typical fallacies around two-wheeler loans.