Considering the rising fuel costs, getting a two-wheeler remains a popular choice for many. Thanks to the easy processing of bike loans, purchasing the two-wheeler you want is now quite simple.
However, before you avail a loan, it is important to know the bike loan interest rates. Various lenders offer different interest rates based on factors like your financial profile, repayment capacity and creditworthiness, to name a few.
In fact, the bike loan interest rates vary from as low as 6.85 to up to 28.30%, or even higher. So, it is important to compare rates across lenders and choose one that best suits your budget. To know how you can avail the best interest rate on a bike loan, here are a few tips to consider.
Maintain a Good Credit Score
Your credit score plays a crucial role in determining your bike loan interest rates. This is one of the most important things to note before availing a loan. This is why it is important to maintain a good credit score. Applicants with low scores generally attract a higher bike loan interest rate.
On the other hand, with a high score, lenders view you as a responsible borrower and are more likely to offer a favourable rate. Do keep in mind that a higher score also allows you to negotiate your loan terms, and get a better deal. This privilege isn’t extended to applicants with low scores.
If you have a low score, the best way to improve it is to pay your EMIs without any delays. Make sure not to miss any instalments to maintain a healthy credit history. With a spotless credit history, you establish a pattern of reliability and this improves your chances at getting a better rate.
To get a low bike loan interest rate, it helps to have good history with the lender as well. If you have transacted with the lender in the past, see if you qualify for a special deal. In some cases, you may get a bike loan instantly as you may have a specialised offer readily available.
Check for Pre-approved Bike Loan Offers
Maintaining a healthy relationship with your lender can increase your chances for pre-approved bike loan offers. In addition, if you have been a loyal customer prompt in loan repayment, you can enjoy the benefits of such offers.
With the help of a pre-approved offer, your bike loan interest rates can decrease. In addition, you can enjoy quick loan processing as well. Pre-approved loan offers provide you with vital information such as interest rates, charges and sanctioned limits. You may be intimated about such offers via email, phone calls or SMS.
Check out the bike loan interest rate and compute your EMIs, which can help you plan your loan according to your monthly budget.
Choose an Appropriate Tenure for Your Bike Loan
The tenure you choose plays a key role in deciding the bike loan interest rates. Simply put, tenure is the repayment timeline and it affects the terms of the loan. For instance, if you opt for a shorter tenure, the EMI amount is higher but you save on interest. The inverse is true with a longer tenure.
As such, it is important to pick a tenure based on your financial capabilities. Do not opt for a shorter tenure to save money at the cost of higher EMIs, which may be difficult to keep up with. Lenders will take this into consideration, and may offer higher bike loan interest rates to adjust for the risk incurred.
Make a Large Down Payment
Paying a substantial down payment can decrease your bike loan interest rates. A down payment is a portion of the total purchase price of the bike you pay upfront at the time of purchase.
When you make a large down payment, the bike loan amount you need decreases, and this can help you get a lower rate. However, ensure you have saved enough funds to manage the down payment and the additional costs you would have to incur going forward.
Clear Off Existing Debts
It is important to repay all your existing loans to get the best bike loan interest rates. This is because of your debt-to-income ratio, which is a key factor in determining your bike loan eligibility. Simply put, this is the ratio of your income against your existing debt, and lenders prefer you to have a ratio of 40% or lower.
This is because a higher ratio suggests that a large chunk of your income is earmarked for other debt, and that you may not be able to take on more debt comfortably. This increases the risk incurred, and so the lender will likely increase the bike loan interest rates. The best way to manage this ratio is to pay off your existing loans. Be it credit card bills or other loans, repay them at the earliest to avail attractive interest rates on your bike loan.
Compare Bike Loan Interest Rates Online
As the market is flooded with many lenders, you have to compare bike loan interest rates offered online. While some financial institutions offer low interest rates, others have relatively high rates.
Comparing the bike loan interest rates helps you zero in on a lender that best fits your requirements. When comparing different lenders, check for additional charges like foreclosure, processing fees and prepayment costs. Assessing the different parameters helps you identify an instrument that is truly cost-effective over the long term, and not just one with an attractive bike loan interest rate.
Considering these factors can help you find and avail the bike loan interest rates in the market. Avoid making any hasty decisions, and plan your loans before finalising any deals to ensure your financial well-being in the future.
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