How to Buy a Bike on EMI?
Biking is not just a mode of transport but also an enjoyable activity and a way to relieve stress for many. Due to the lack of sufficient public transport, motorcycles have become an affordable means of transport, even for short distances. However, a major challenge that has been noted in the adoption of bikes is the expensive initial investment costs of acquiring the bike. This is where the option to buy a bike on EMI comes in handy.
A two-wheeler loan on EMI or Equated Monthly Installments, lets you purchase a bike in small monthly installments for a certain term. This leads to a situation where one is able to acquire an item that they would not be able to afford due to the high cost.
If you are also thinking of how to buy a bike on EMI but are not sure about how to proceed, then this article shall be of help to you since it provides you with all the necessary information that you need. If you want to know more about buying bike insurance and renewing expired insurance, refer to this blog.
Advantages of Buying a Bike through EMI
Purchasing a bike is capital-intensive, which means that a huge amount of capital is spent at one time. Choosing EMI financing spreads this cost evenly over a time period of your preference, which is 12–36 months. This reduces your monthly expenditure to a great extent. Some key benefits of buying a bike on EMI are:
- Requires lower monthly output: You do not have to make the payment of the full price at once but rather make small monthly payments, which are easier to make. This relieves the financial pressure of making a bike purchase.
- Owning a bike sooner: The fact is that you do not need to save up the whole sum in order to purchase the bike. When you buy a bike on EMI, it is an especially good option because it enables you to own a bike as soon as possible.
- Better credit score: On-time payments of 2-wheeler loan EMIs enhance the credit score, thus making follow-up loans cheaper for you.
- Minimal documentation: Many of the bikes on the market today are available through bike loans with less paperwork, which makes the approval process faster and easier.
- Lower interest costs: Choosing a loan tenure of between 12 and 18 months can also mean a smaller total interest charge.
Who Offers Bike Loans?
Today there are many option Cs that offer bike loans with different interest rates and loan periods. While selecting a lender, one can compare the interest rate, processing fee and other charges among the lenders. Some popular options are:
Banks: SBI, Axis Bank, HDFC Bank, ICICI Bank, etc.
NBFCs: Bajaj FinServ, Tata Capital, Fullerton India, HDB Financial Services, etc.
Manufacturer tie-ups: Almost all the bike manufacturers, such as Hero, Bajaj, and TVS Finance, have partnerships with banks and NBFCs to offer credit to customers.
Also read: Check Bank Insurance Details With These Simple Steps
How to Buy a Bike Through an EMI
Follow these simple steps to know how to buy a bike on EMI seamlessly:
Step 1: Fix Your Budget
- Before researching how to buy a bike on EMI, the first thing that should be determined is the amount of money that one wants to spend. First, include the on-road price of the bike model that you would like to purchase in your calculation. This involves the actual cost, which has the ex-showroom price coupled with RTO and insurance costs.
- Subsequently, decide on how much to borrow and for how long, given your earnings and ability to pay back. Other things to consider are the amount of down payment that you intend to make.
Step 2: Determine Bike Loan Qualification
- Almost all the lenders have an easy online eligibility calculator that enables you to know your qualifying status. Just by providing information such as your location, job, salary, current loans, etc., you can find out about the loan amount and tenure that are available to you. This assists in narrowing down the list of appropriate lenders. You should be able to borrow an amount that is at least 75-80% of the on-road price of the bike.
Step 3: Compare Financing Options
Now compare available how to buy a bike on EMI schemes on parameters like,
- Rate of interest
- Processing fees
- Foreclosure charges
- Insurance coverage
- Tenure flexibility
- Required documents
This will assist in identifying the bank or the NBFC (Non-Banking Financial Company) offering the loan as per your requirement at the lowest rate of interest. Use an online bike loan EMI calculator to compare the different interest rates and EMI schemes.
Step 4: Seek a Loan
You can either visit the branch or apply for a loan online by completing the loan application form. The documents required for a bike loan are:
- Identification documents (Aadhar card/ Passport/ Driver’s License/ Government employment ID)
- Passport-size photos
- Residence proof
- Pay slips of the last three-six months (Aadhar card/ Passport/ Driver’s License/ Government employment ID/ Voter ID/ relevant bills)
- Bank statements
- The details of any existing loans, if any
Some of the new features that have emerged in the market include paperless approval for simplifying documentation.
Step 5: Apply and obtain approval for a loan.
- In this case, the lender will analyze income, repayment capacity and credit score as the criteria to determine your credit worthiness. Once your application is accepted, they will make available the loan details, inclusive of interest rate, processing fees, repayment period, etc., in an agreement that must be signed by the borrower. There can be some lenders who can provide you with some leeway to adjust the loan amount or the duration as per your preferences.
Step 6: Pay Advance EMI & Book Your Bike
- The first EMI is to be paid in advance in case of this type of financing before the bike is delivered to the customer. You only need to pay over and above the loan amount, which will be paid to the dealer in most cases. Arrange to fix a delivery date from the dealer after the transfer of loan procedures has been completed.
Step 7: Ride Home Your New Bike
- Once the loan formalities for the payment of the bike are over, you can take your bike home after the insurance and RTO registration formalities are done. It is also important to ensure that you get all the documents of ownership from the dealer. Ensure you make early and regular payments of your EMIs throughout the tenure of the loan so that you can have a stress-free time and to have your credit rating improved. And of course, go for every ride on the new bike without having to spend a fortune!
Also read: Which Is The Best Engine Oil For Your Bike? Find Out Now!
Points To Be Considered
While opting for how to buy a bike on EMI financing, keep these tips in mind for smooth processing:
- Do not apply for many loans at a given time since it has a negative impact on the credit score. Thus, select the loan tenure to be about 12–18 months so that you end up paying less interest charges.
- If you can afford to do so, pay a bigger down payment to minimize the loan to be paid.
- There should be total openness, especially when offering the documents that are needed so as to facilitate approval.
- Be cautious when signing the loan contract, as it contains specific terms and conditions.
- Ensure timely payments are made on the borrowed amount to avoid penalties or having a record of default.
- Make sure you opt for a good insurance policy for your new bike: choose one that covers theft, accidents, and third-party damages.
Conclusion
We do want to stress that this detailed guide should have provided you with a strong basis for how to buy a bike on EMI. Financing institutions help in the acquisition of bikes by offering loans, making it affordable without having to pay an expensive down payment for the vehicle. Comparing various loan schemes, evaluating your budget, and ability to repay the loan amount, you will be able to find out the best bike plus loan deal.
Therefore, do not waste much time and ride home your favorite bike TODAY with the help of the handy guide on how to buy a bike on EMI provided above.
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EMI-based purchasing of bikes: A list of frequently asked questions
Frequently Asked Questions (FAQs)
Which papers am I required to submit when applying for a bike loan?
KYC documents with both identity and address proof, bank statements or salary slips, and details of the existing loan, if any. Most of the lenders also offer pre-approved credit offers at present.
How much loan am I eligible for as per the bike I possess?
The loan provided can be up to 100% of the ex-showroom price but ranges are roughly 75-80% of the on-road price including RTO and insurance charges. A down payment will lower the overall indebtedness.
Which one is less—the EMI for a used bike loan or for a new bike loan?
The interest rate on used bikes is about 2-2.5% above the new bikes. But going for a used bike gives approximately 30% lower cost, thus bringing a lower overall outgo. Make sure that before purchasing the used bike, the condition of the bike is well tested.
Which bank offers a personal loan for a bike at the lowest interest rate?
Bike loans at SBI start at as low as 10%, making it the lowest interest rate in the market. However, compare all the charges before considering which is the cheapest one.
What if I want to pay my bike loan before the tenure period is complete?
Most of the lenders give the option of foreclosure of the remaining loan amount. While others allow you to waive off these charges if you foreclose after having made EMIs for at least one year. Higher down payment and opting for shorter tenure also enable faster foreclosure.
