Navigating Bike Loans for First-Time Buyers
Article by Drivio | 30th Sep 23
Check out these first-time buyer tips to streamline the process of motorcycle financing. Don’t let the pressure of repayment rob you of the joy of enjoying the newfound freedom with your motorcycle.
As a bike enthusiast, you’re eager to hit the open road and enjoy the freedom with your new motorcycle. However, navigating bike loans for first-time buyers is crucial, given that you might be willing to get the bike financed by a bank or NBFC. If you are purchasing a motorcycle, it’s imperative to consider several factors that should ease up the financing process.
In this guide for newcomers to motorcycle financing, we have discussed these crucial aspects, offering some invaluable tips. With these first-time buyer tips, a smooth motorcycle financing journey awaits you where you can comfortably repay your loan while enjoying the rides.
What Is A Bike Loan And Why To Consider One?
Also referred to as a two-wheeler loan or a motorcycle loan, a bike loan is a financial product that helps you purchase a motorcycle. After borrowing money from a lender, you need to repay this amount along with the interest over time in monthly interest. Apart from the interest, your repayment may include additional fees.
Navigating bike loans for first-time buyers is crucial, and you might be wondering why you need a loan in the first place. Considering the high value of a motorcycle, financial assistance from reputed lenders can help you acquire it faster. Besides, established banks and NBFCs offer flexible repayment tenures and low rates of interest. This significantly eases up your financial burden, and owning your dream bike becomes much more affordable.
Different Types Of Bike Loans To Apply For
Before exploring the first-time buyer tips, let’s take a look at the different types of bike loans you can apply for.
1. Secured Bike Loans
- Collateral: Like any other type of secured loan, secured bike loans require you to provide collateral as a security. This may be your existing bike the one you are purchasing, or any other asset that secures the loan.
- Interest rates: The interest rates for secured bike loans are lower compared to the unsecured ones which out to be riskier to lenders.
- Longer tenure: Bike owners applying for secure loans qualify for longer repayment tenures. This implies that you would have a smaller monthly obligation to fulfill.
2. Unsecured Bike Loans
- No collateral: You don’t need any collateral for unsecured bike loans, but the interest rates are higher.
- Shorter tenure: Considering the risk involved with unsecured loans, lenders expect you to repay the amount faster.
- Credit score matters: Lenders are likely to scrutinize your credit score to determine whether you are financially responsible and repay the unsecured loans.
First-time buyer tips for motorcycle owners
Here are some effective first-time buyer tips that should help you finance your motorcycle through a bank or NBFC.
1. Check your credit score
Remember, your credit score goes a long way in determining your eligibility for the loan, its interest rate, and tenure. Make sure to review your credit report and take the necessary steps to improve it before applying for the bike loan.
2. Set a budget
Consider the model or type of bike you are eyeing to purchase. Accordingly, set a budget for the motorcycle, factoring in additional expenses like maintenance, fuel, and insurance.
3. Research lenders
While navigating bike loans for first-time buyers, it’s imperative to shop around and research leading lenders. Scrutinize the terms and conditions put forward by each lender and compare interest rates, repayment options, processing fees, and penalties. Go for the product that perfectly fits your financial situation.
4. Pre-approved loans
Getting a pre-approved motorcycle loan gives you a competitive edge when negotiating with sellers. Besides, it would help you stay within your budget.
5. Explore interest rates
The overall cost of your bike loan largely depends on the rate of interest. Make sure to understand whether the lender offers fixed or variable interest rates and the corresponding impact on your monthly payments. Also, negotiate for lower interest rates and check out whether you qualify for the lowest rates of interest.
6. Read the fine print
One of the most crucial first-time buyer tips is to read the fine print and scrutinize the loan agreement carefully. Check out whether they have any hidden fees or charges. Before signing, make sure that you understand the terms and conditions.
7. Save for a Down Payment
Saving for a down payment reduces your dependence on loans. Lenders are more likely to approve your application if you manage to pay around 20% to 30% of the cost of the bike upfront. While some lenders offer 100% financing, making a down payment would reduce your monthly payments.
8. Buy an insurance policy
To protect your investment and secure your motorcycle, it’s wise to get comprehensive insurance coverage for the bike. Consider getting one of the two-wheeler insurance policies that offer additional benefits.
9. Decide the tenure
Typically, bike loans come with a tenure ranging between two to five years. It’s recommended to settle with a shorter loan tenure as this saves your interest significantly. However, you need to weigh your repayment capacity and consider ongoing repayments. A longer tenure would help you mitigate financial stress as it would allow you to manage other loan repayments simultaneously.
10. Make timely payments
Once you get your motorcycle financed by the lender, make sure to repay your EMIs on time. Late or missed payments would tarnish your credit score, robbing you of your creditworthiness that can make it challenging to obtain loans in the future.
Navigating bike loans first-time buyers may seem daunting. However, with careful planning and the right approach, you can acquire your dream motorcycle without facing financial hurdles.
In this guide for newcomers in motorcycle financing, we have comprehensively discussed the best practices for first-time bike owners. Also, choose a reputable lender and closely read the loan terms before you obtain one. These first-time buyer tips will put you on track as you brace up for thrilling rides!