- September 1, 2021
Top 4 Tips To Get The Best Two Wheeler Loan Rates
In this era of COVID-19 where traveling by private vehicles is safer than public transportation, getting a two-wheeler has become a necessity. Over the past two years, the demand for two-wheelers has soared significantly. Given the financial instability, it is an affordable option to navigate through daily traffic and get one step closer to freedom from public transportation. Besides maintaining the social distancing norms of the pandemic, you can save both time and money.
However, not everyone can afford to buy a two-wheeler without compromising their finances. In such cases, it would be wise to apply for one of the best two-wheeler loans in the market. The benefit of getting a loan is that depending on your affordability, you can get up to 100% of the two-wheeler’s on-road price as a loan. The interest rate can go as low as 1% depending on your age, income, credit score, current financial obligations, etc.
Two-wheeler loan interest rate
Two-wheeler loan interest rate is one of the essential factors in your loan. It has a direct impact on your monthly EMI and determines whether you can afford to repay your loan. The interest rate varies from lender to lender, so you will have to choose wisely before applying for the best two-wheeler loan. It is worth noting that your two-wheeler loan interest rate depends on factors such as income, credit history, loan amount, loan tenure, etc. Before applying for a two-wheeler loan, make sure to use the two-wheeler loan EMI calculator to determine your affordability.
Here are the top four tips to get the best two-wheeler loan interest rate:
- Credit score
Before approving your two-wheeler loan, your lender will check your credit score to determine your creditworthiness. It is a three-digit number that indicates your credit history and credit behavior based on which the lender decides whether or not you are a credit-worthy person.
The factors that go into the calculation of a credit score are:
- Credit history
- Length of credit history
- Credit mix
- New credit
- Credit utilization
Your credit score enables the lender to determine whether or not you can repay the loan amount with interest on time. The minimum credit score requirement to get the best two-wheeler loan is 750. If your credit score is above the said requirement, you can negotiate to get the best interest rate for your loan.
- Opt for a lower Loan amount
The loan amount is another factor that directly affects your bike loan interest rate. Most lenders may not offer you 100% of the vehicle’s value as a loan. You may get up to 80% of the bike’s on-road price as a loan depending on the value of the loan. If the value of the bike is higher in the market, you will have to get a higher loan amount. Lenders usually charge a higher interest rate on a higher loan amount to justify the risks involved.
However, if you apply for a lower loan amount, your lender may consider a lower interest rate as there is a low risk of defaulting on your payments. So, if you wish to secure a lower interest rate, it is better to choose a lower loan amount. It is advisable to use a bike loan EMI calculator to determine your loan affordability.
- Choose the shorter loan repayment tenure
Whenever you apply for a longer loan tenure, your interest rate will always be higher. Your lender may consider you risky as the chances of defaulting on your loan payments are higher. It increases the risks associated with your two wheeler loan. Hence, lenders charge a higher interest rate to cover the losses and justify the risk involved. If you intend to avail of a lower interest rate, opt for a shorter loan tenure.
- Higher down payment
As mentioned earlier, most lenders may not offer you 100% of the bike’s on-road price as a loan. You may get up to 80% of the bike’s market value as a loan. It means that you will have to pay the remaining 20% as a down payment. It is a common fact that the higher the down payment you make, the lower your loan amount will be. Having a lower down payment decreases the interest rate you will have to pay on your bike loan.
Before applying for the best two-wheeler loan, it would be wise to use a two-wheeler loan EMI calculator to determine how much you can afford to pay in interest based on the loan amount and repayment tenure.