How to Choose the Right Two-Wheeler Loan?

Buying a two-wheeler these days has become very much possible for people because of two-wheeler loan. There are not only banks but a lot of NBFCs who give out these loans to people making it easy for people to buy the bike of their choice. If you want to opt for a bike loan, do so online as the application procedure is quite streamlined.

With many lenders having a simple online loan application procedure, applying for online two-wheeler loan has become streamlined and simple. However, choosing the right loan application is important.

Here are some tips to choose the right one:

1. The interest rate:

The interest rate is the primary consideration. It determines the total cost of the loan and the bike instalment amount. Some lenders base their interest rate on a floating rate or their marginal cost of lending funds. Others have a fixed rate of interest. Before you pick one, you need to find out about the type of interest and what will be the impact of changing interest rates in the future on your loan interest rates. If the lender allows for a rate increase, it must accordingly also pass on a rate decrease. 

1. Loan processing fees:

Loan processing charges are between 1.5 per cent to 4 per cent of the value of the loan amount. This must be paid to the lender upfront before availing the loan. These add to the cost of the loan. 

1. Negotiations:

When you have a few loan applications to consider, you should pick the lender with whom you can negotiate. It is possible to negotiate with lenders about reducing the loan processing fees or other documentation fees. If you have a strong repayment power, the lenders may reduce the interest rate on your 2-wheeler loan. However, this depends on the current interest rates as well as your repayment ability. If you can service the loan easily and have a high credit score, it will give you a lot of advantage. 

1. Special offers:

A lot of times banks and other lenders have special offers especially during festival times. These offers generally waive off charges like loan processing fees or give reduced interest for a few instalments. Choosing a lender who gives these offers may help you save interest costs and bike instalment. 

1. Other charges:

Apart from loan processing fees, there are other fees like pre-payment fees and part payment fees. If you have enough liquidity to pay the two-wheeler loan before time, then one charge you need to consider is the pre-payment or part payment fees. Lenders generally have a certain minimum number of instalments that need to be paid before they allow a person to close out the loan. Once these instalments are paid, the lender charges a fee over and above as a percentage of the amount part repaid or prepaid.