9 Factors to Consider Before Taking a Motorcycle Loan

Buying a motorbike can be one of the most exciting experiences, and doing so on loan with the best terms makes the adventure even more appealing. A motorcycle loan is one of the best options to finance your favorite bike and makes it easier to buy your choice of a motorbike without worrying about paying the full price at once.

However, finding the right bike loan can be quite challenging, with numerous lenders and banks offering motorcycle loans. There is plenty to consider before taking a two-wheeler loan. Here are nine key factors to consider before taking a motorcycle loan.

1. Eligibility criteria

The eligibility criteria of a two-wheeler loan applicant vary from one lender to another. However, most lending institutions follow similar standards, such as the minimum and maximum age or residing at a declared location for at least one year. Check the eligibility criteria from the lender's website before applying for a bike loan and ensure you fulfill all the requirements. This will help you get the best loan more quickly.

2. Loan application process

Unlike before, two-wheeler loans can now be applied for and processed online. Getting motorcycle finance is straightforward and hassle-free as long you qualify for a loan.

Navigate your lender's motorcycle loan application page and fill in your personal and financial details. In addition, provide information on the motorbike, such as the RTO location, the on-road price, and the dealer's name.

Along with the application form, you will be required to submit some documents online. Here is a list of required documents for a motorcycle loan:

• Proof of identification: Identification card, passport, PAN card, and driver's license.
• Proof of income: Income tax returns, payment slips, and bank statements.
• Proof of residence: Mortgage bills, home utility bills, and title/deed to residential real property.
• Passport size photos

3. Check your credit score

Your credit score is assessed by lenders or financial institutions when you apply for a motorcycle loan. The better your score, the lower interest rates you will get on your two-wheeler loan. If you have a low credit score, you will be offered a high-interest bike loan since a bad score shows less credibility as a borrower.

A good score for a motorbike loan is 750 or more, which makes the purchase easy with motorcycle financing. In addition, a decent credit score will help you to qualify for other perks, such as cashback and reward points.

Different lenders offer disparate interest rates on two-wheeler loans, but you should always compare all the available offers you are getting for the loan if you have a bad credit score. To check your credit score, use credit bureaus like CIBIL, which gives you a credit report online.

4. The interest rates

It's important to compare interest rates offered by different lenders when looking for a bike loan. Take your time to consider a lender that offers you a good interest rate that fulfills the need for your motorcycle loan. Furthermore, be sure to compare both fixed and variable interest rates.

The interest rates often range between 9.5% and 17%, and if you compare the rates, you can get the lowest rate, making your loan more affordable. You should also compare the length of the loan and the monthly payments.

5. Additional charges

Interest is not the only fee you need to pay for a bike loan. Your lender will also charge you processing fees. These charges will vary depending on the lender, but they can go up to 3% of the total loan amount. To reduce the financial burden, go for a lender with the lowest processing fees.

6. Loan tenure

Your motorcycle loan's equated monthly installment, also known as EMI, largely depends on the loan tenure. Of course, the loan amount and interest have an impact on your two-wheeler EMI.

If you have a long tenure, you will get a low EMI, but you will pay a higher interest rate. On the other hand, the higher the EMI, the lower the interest you pay. Therefore, choose your loan tenure wisely when applying for a motorcycle loan.

You can calculate your two-wheeler loan EMI using the EMI calculator available on your lender's website. When you know your EMI amount in advance, you can manage your finances efficiently, which will help you regulate future expenses accordingly.

7. Look for special offers

Compare multiple lenders and see who is giving out the best offers. It's a good idea to take a bike loan during the festival season since many offers will be available. In addition, check for offers such as zero or low processing fees, free accessories, free gold coins, and low-interest rates that are available. Keep a close watch on your lender's website and social media for seasonal discounts and offers.

8. Loan security

Most loans require you to give your motorbike as a security or collateral. That means the lender or bank has some rights over your motorcycle and can potentially repossess it if you break the agreement or miss your loan repayments. If you decide to sell or trade in your bike, you must pay off a secured loan before the sale can be finalized. You can opt for an unsecured loan, but you should expect to pay a higher interest rate for the privilege.

9. The maximum amount you are eligible to borrow

Most lenders and banks have their own standards in offering loans. Motorcycle loans mainly depend on the price of your bike and your creditworthiness.

It's good to ask for more funding than you need to buy a bike and always calculate the amount of money you require depending on your needs. If your motorcycle loan application is for a higher amount, the lender is more likely to reject your application.

The bottom line

Getting a motorcycle loan will take you closer to your dream bike, but you shouldn't hurry to make hasty decisions. Consider all these factors before applying for a motorcycle loan. In addition, it's good to review the terms and conditions before applying for a bike loan. Doing this will help you get the best deal on your two-wheeler loan and help you achieve your goal of buying a motorbike without losing your peace of mind.