Navigating the World of Used Two-Wheeler Loans: What You Should Know

Navigating the World of Used Two-Wheeler Loans: What You Should Know

Loans by Team Drivio | Mar 22, 2024

Check out these second-hand loan insights for some crucial tips for financing used motorcycles. While many lenders offer these loans, it’s wise to check their terms of lending, interest rates, processing charges, and prepayment charges, and choose suitable loan tenure. Also, verify the documents of the used bike carefully before applying for the loan.

As the popularity of two-wheelers continues to rise in India, you must be bracing up to get your bike financed by a reputed lender. While new motorcycles can weigh heavy on your pockets, how about getting a second-hand bike financed through banks? In this guide, we have shared some tips for financing used motorcycles.

Although used bikes are cost-effective, they still involve a substantial investment. While navigating used two-wheeler loans, what you should know has been discussed below.

Why Finance Used Bikes Through Loans?

The process of purchasing a used bike becomes much more convenient and financially viable when you finance it through banks or NBFCs. As you look out for second-hand loan insights for two-wheelers, check out the reasons justifying the purchase of used bikes through loans.

  • Affordability: With motorcycle loans for used bikes, you can spread the cost of purchasing it over a period. This makes the process more affordable and stress-free compared to shelling out the entire amount at a time.
  • Higher purchasing power: Bank loans for used bikes are popular as they provide you with a higher purchasing power, covering a sizable part of the cost of the bike. So, you enjoy the liberty to choose from a wider range of models, brands, and features.
  • Preserve your savings: Why spend all your savings while purchasing a used bike? It’s logical to preserve your savings for emergency funds or other crucial expenses.
  • Fixed interest rates: Borrowers can decide to get a used bike loan at fixed rates of interest. This makes your EMIs predictable and stable.
  • Customized loans: Reputed banks often customize used bike loans. This allows you to choose the tenure of the loan, repayment frequency, and the amount of down payment, based on your convenience.

  Now that you have gained some basic second-hand loan insights, let’s check out the detailed guidelines for applying for such loans.

Tips for Financing Used Motorcycles

Here are some tips for financing used motorcycles that buyers will benefit from.

1. Explore your loan options

Compare loan offers from different NBFCs, banks, and online lenders and look out for competitive rates. Also, make sure that they offer such loans at favourable terms. Consider factors like interest rates, loan amounts, tenure options, processing fees, and repayment terms. It’s wise to obtain the loan from a lender offering favourable terms and competitive rates.

2. Check your credit score

 Before applying for a used bike loan, check out your credit score. The reason is, getting rejected for the loan due to a poor credit score can further deteriorate your report.

With a healthy credit score, above 750, you stand better chances to get your loan approved at lower rates of interest. If your credit score looks less than perfect, try to repay your bills and reduce your debt. Accordingly, you can apply for the loan.

3. Budget wisely

Prepare your budget to finance the two-wheeler loan. Set apart a fund to manage the down payment. Also, you need additional funds for insurance, registration, and maintenance costs. Most importantly, borrowers should repay the EMIs on time, so consider the amount in your monthly expense list.

While budgeting, make sure that the EMIs fit your budget without straining you financially.

 4. Check out vehicle history 

 When it comes to purchasing a used bike, inspect the ownership history and maintenance records thoroughly. Check out its insurance status and make sure that the vehicle is free from any legal or financial liabilities like pending dues or outstanding loans.

The registration and documentation of the bike should be updated and valid.

5. Prepare required documents

 Gather all necessary documents, including identity proof, address proof, income proof, vehicle documents, and other papers. The documents should be organized and made readily accessible to be submitted when you apply for the loan. 

6. Understand loan terms

Take care to scrutinize the loan terms and ready the documents carefully. This will help you understand the:

  • Loan tenure
  • Interest Rates
  • Processing Fees
  • Prepayment Options
  • Foreclosure Charges

 In case of any doubt, make sure to get it clarified from the bank before signing the agreement. This will help you avoid potential misunderstandings later.

Things to Know About Used Bike Loans

 Check out these second-hand loan insights to understand crucial aspects like loan amount, interest rates, and repayment periods.

1. Loan amount

Lenders typically offer loans covering 70% to 80% of the market value of the used bike. Factors like the age, condition, and resale value of the bike determine its value. Accordingly, banks and other lenders sanction the loan amount.

2. Down payment

Often, you need to make an upfront payment or down payment, to fund the amount not covered by the loan. This amount depends on the lender’s policies on the percentage of the bike value they will finance through loans.

3. Loan tenure

 For used bikes, the loan tenure typically ranges from 1 to 5 years. Based on your financial goals, affordability, and repayment capacity, you can choose this tenure.

 While longer tenures reduce your EMIs, you end up paying more interest over the period. On the other hand, shorter loan tenures involve lower interest, but you need to fork out a higher EMI.

4. Interest rates

 Interest rates for used two-wheeler loans may differ from those for new vehicle loans. Lenders generally consider your creditworthiness, loan amount, tenure, and market conditions while determining this rate. You can choose between fixed and floating interest rates while financing a second-hand bike.

5. Processing fee

 Most lenders charge a processing fee during the application, which can range from 1% to 5% of the loan amount. It’s recommended to compare processing fees across different lenders and settle with the most cost-effective one.

Wrapping Up

 Now that you have got some valuable tips for financing used motorcycles, you can streamline your purchasing process. Explore various loan options provided by reputed banks, NBFCs, and other lenders. While calculating the affordability of the loan, factor in additional costs like processing fees.

With easy online loans available, buyers can experience a fast and hassle-free borrowing process. Apply for your loan with a trusted lender for affordable used bike financing.