In today’s world, motorcycles have become an integral part of our lives. Besides being easy to maneuver, bikes are popular because they need low maintenance and provide ultimate comfort. However, with the prices of motorcycles steadily increasing every year, not everybody can afford to purchase a motorcycle.
If you plan to purchase a two-wheeler but do not want to break your savings, a Bike Loan can be handy. Bike Loans are instantly approved, require minimal documentation, provide attractive interest rates and extended tenure, and offer up to 100% of the bike’s value.
Read on to discover the top benefits of availing of a bike loan and tips to maximise the benefits in the long run.
8 Benefits of Bike Loans in 2024
Below are the top 8 reasons to opt for Bike Loans in today’s landscape:
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Quick Approval
A Bike Loan’s first and most significant benefit is that it gets approved easily. There are two broad ways of applying for a Bike Loan offline and online.
If you take the offline route, you must visit the financial institution’s office, fill out the application form, and submit the physical documents. But, if you apply online, you don’t need to travel anywhere to get the loan approved. Instead, you can open a webpage on your smartphone or PC/laptop, apply for the loan online, and upload your documents.
Once your financial institution checks and verifies your application, you will get a message about the loan approval, and you can take home your dream motorcycle without any hassle.
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Easy Eligibility and Minimal Documentation
Almost any salaried or self-employed Indian citizen above 21 years of age can apply for a Bike Loan. However, financial institutions verify the borrower’s net income before approving the loan.
Usually, there is a threshold income limit for loan approval. The threshold limit varies among financial institutions. You may enquire about it before submitting your loan application.
When it comes to documentation, it is also as hassle-free as the application process. All you need to do is submit your identity and address proof, bank statement, income proof, Income Tax Return (ITR), signature, and photograph. Self-employed professionals or business persons must submit their business stability or ownership proof along with the abovementioned documents.
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Attractive Interest Rate
financial institutions like ICICI Bank offer the lowest Bike Loan interest rate, making this feature-rich loan all the more attractive. You can use a free Two Wheeler Loan EMI calculator to estimate the loan amount accurately.
An EMI calculator uses three figures, loan amount, tenure, and interest rate, to display the EMI amount. Also, you can change the input figures multiple times to arrive at a suitable number for your Bike Loan.
However, exercise caution before choosing the loan amount since a higher loan amount will also mean more liabilities. Your financial institution may also increase the interest rate to minimise their credit risk, increasing your EMI.
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Flexible Tenure
A Bike Loan comes with a flexible repayment term of up to 48 months. This leaves you ample opportunities to choose the best EMI without stressing your finances. However, an extended tenure may also mean a higher interest rate since the financial institution’s risk exposure would remain longer. Conversely, some financial institutions offer discounted rates for short-term Bike Loans. Analyse your fixed monthly expenses before finalising the loan term since it would affect your EMI.
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Credit Score Enhancement
A Bike Loan prepares you to enhance your credit score and improve your creditworthiness. You can increase your credit score through timely repayments of your Bike Loan EMI. And a high credit score increases your eligibility for loans and credit cards. Moreover, you can seek out a discount on interest rates if your credit score is high.
A good credit score speaks volumes about your creditworthiness and financial discipline. So, make sure you repay your Bike Loan EMIs before the due date every month to cherish the benefits of a high credit score.
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Wide Applicability
Bike Loans are available for all kinds of motorcycles. Be it a sports bike or an adventure bike, a city bike or a scooter, a premium bike or an electric bike, you can conveniently choose your preferred model without worrying about the funding.
Financial institutions generally approve the loan amount after carefully evaluating the borrower’s repayment capacity. So, if your repayment capacity meets your financial institution’s expectations, you can pick any motorcycle you want.
It is good to note that you may still go ahead and purchase your dream bike even if your repayment capacity does not meet the financial institution’s expectations. In such a case, you may have to make a 10% -20% down payment to increase your eligibility for the loan. You may further increase the down payment amount to reduce your Bike Loan liabilities and enjoy stress-free loan repayments.
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Tax Benefits
If you are a self-employed professional or business person, you may avail of tax benefits for paying your Bike Loan EMI. You can claim deductions from your taxable income under Section 80C of the Income Tax Act, 1961 if you use your two-wheeler only for business purposes. Eligible expenses include fuel, insurance, maintenance, and loan interest.
In this regard, note that the deduction mentioned above applies only to bikes used for business purposes, not personal use.
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Cost-Effective
Lastly, a Bike Loan allows you to free up your savings balance. Since you can get a loan of up to 100% of the bike’s on-road price, you can protect your savings while enjoying the convenience of a bike ride.
To keep your financial freedom intact, create a provision for repaying the loan before the due date every month. Failing to repay Bike Loan EMIs can result in legal notices and penal actions. So, choose a loan amount that you can repay without any hassle and realise the true meaning of financial freedom.
Conclusion
A Bike Loan offers unparalleled convenience and huge savings. The loan amount, interest rate, and other features depend on your eligibility – the higher the eligibility, the better the loan terms.
A little prudence in managing the loan can help you realise the true potential of a Two-Wheeler Loan in 2024. Use a Two-Wheeler Loan EMI calculator to compute your future liabilities before choosing the loan amount. This will ensure you select a repayment plan aligning with your financial capacity and goals.