The excitement of owning a new two-wheeler is unmatched. If you are planning to buy one this year, make sure you have the required funds so that you don’t have to compromise on your dream bike! Securing a online bike loan is the most convenient option to secure necessary funds when out of savings.
A Two Wheeler Loan can be a smart and efficient way to finance your new ride. There are some common mistakes that many people make when taking a loan. This post highlights seven mistakes borrowers must avoid while taking a Two Wheeler Loan in India in 2023.
What is a Two Wheeler Loan?
Financial institutions like NBFCs offer a Two Wheeler Loan to individuals aiming to purchase a two-wheeler vehicle, such as a scooter or a bike. The loan provides financing for the vehicle's purchase, allowing the borrower to repay the loan amount in fixed monthly instalments over a specified period. The loan amount, interest rate, and tenure vary based on the borrower's creditworthiness and the lender's policies.
Avoid Making 7 Mistakes When Applying for a Two-Wheeler Loan
Below are some mistakes you must avoid making while taking a loan to buy a two-wheeler:
Mistake #1: Not doing enough research
The first mistake many people make when taking a Two Wheeler Loan is to do the required research. It is essential to take the time to research different loan options and lenders to make an informed decision. Start by researching different loan providers and comparing their interest rates, fees, and repayment terms. Make sure to read and understand the terms and conditions of the loan before signing documents.
Mistake #2: Not understanding the loan terms
Another mistake to avoid when taking a Two Wheeler Loan is understanding the loan terms. Many people need to take the time to read through the loan agreement and end up with surprises down the road. Make sure to ask questions and clarify any doubts before signing the loan agreement. Pay attention to key terms such as prepayment penalties and processing fees, as they can impact the total cost of the loan.
Mistake #3: Borrowing more than you can afford
A major mistake you might make is borrowing more than you can afford. It is important only to borrow what you can afford to repay. Consider your income and expenses and calculate how much you can pay monthly for your loan. Several free tools, such as EMI calculators, are available to help with this task. Using an EMI calculator to estimate your monthly payments goes a long way in getting the math right.
Mistake #4: Ignoring your credit score
Your credit score is an essential factor that lenders consider when reviewing your loan application. Ignoring your credit score can be a big mistake when taking a Two Wheeler Loan. A good credit score can help you secure a lower two wheeler interest rate and better loan terms. Check your credit score before applying for a loan and take steps to improve it if necessary. It includes paying bills on time, keeping credit utilisation low, and disputing errors on your credit report.
Mistake #5: Failing to compare loan options
Another mistake to avoid when taking a Two Wheeler Loan is failing to compare different loan options. Research and compare various loan providers' interest rates, fees, and repayment terms. Refrain from settling for the first loan offer you receive, as you may find a better deal elsewhere. It can save you money in the long run and ensure you get the best loan terms possible.
Mistake #6: Not having a repayment plan
Not having a repayment plan can be a big mistake when taking a Two Wheeler Loan. Make sure to plan to repay your loan before taking it out. It includes setting a budget, prioritising loan payments, and making extra payments when possible. A repayment plan can help you stay on track and catch up on your loan payments.
Mistake #7: Opting for a zero-down payment
Opting for a zero-down payment option for a loan may seem tempting, but it can cost you more in the long run. A down payment can reduce the total loan amount and the interest charged over the loan tenure. Without a down payment, the loan amount increases, resulting in higher interest charges.
A Two Wheeler Loan can be a great way to finance your new bike in 2023. Avoiding these common mistakes is essential to ensure you get the best loan terms possible and avoid any surprises.
Taking a loan is a big financial decision and should be cautiously approached. While it can be tempting to jump at the first loan offer you receive, comparing loan options and researching can save you money in the long run.
Finally, enjoy your new ride! A Two Wheeler Loan can be a great way to get on the road and explore new places. Ensure you take care of your ride by maintaining regular maintenance and investing in quality gear such as helmets and riding jackets. Safe riding and happy loan repayment!