Compared to the 80s and 90s, the overall standard of living and spending capabilities of the average Indian has improved. The present generation has more money at their disposal that they can use to buy things they desire and need.
Apart from buying real estate or going on holidays, the common expense for the average Indian is on personal vehicles. Even if the spending capabilities of the average Indian have increased, people are more cautious with their money. This statement holds when one notes that even the well-off individual refrains from buying a car. Instead, they choose to spend the money on two-wheelers.
Why do people buy Two Wheelers instead of not cars?
The reason is simple. The cost of essential fuels like petrol has historically been high. It continues to be this way as India imports the majority of its crude oil reserves from other nations. Next, the cost of owning a car is high compared to a bike or scooter.
Maintenance charges, repair costs, and the cost of spare parts of a car are exorbitant, to be honest. On the other hand, a two-wheeler comparatively is cheap to own. Hence, it is no surprise that Indian traffic mostly comprises two-wheelers and not cars.
Why Finance a Two Wheeler? Why not buy with cash?
Two-wheeler prices in India have shot up exponentially in just a few years, especially since 2019. OEMs cite higher production costs and supply chain disruptions as the reasons behind the price hikes. The price hikes have led to a situation where even entry-level commuter bikes cost more than INR 90,000 on road. Hence, days, when one could go to a two-wheeler dealership with cash and ride their favourite two-wheeler home, are gone.
Does that mean that the sales of two-wheelers in India have suffered due to the price hikes?
Not at all! The reason is simple.
One has easy access to countless financing options these days. All leading traditional and non-traditional lenders in India have financing options specifically designed for two-wheelers. People these days are buying two-wheelers through two wheeler finance. This is the reason why the sales of two-wheelers in India have not suffered despite the unabated price hikes.
Additional Read: How To Apply For Two Wheeler Loan Online And Offline
Furthermore, borrowers can enjoy a flurry of benefits when they choose to buy a two-wheeler through financing options.
Some of the most compelling benefits of two-wheeler financing options are mentioned below.
- Whether one applies for a loan from a bank or an NBFC, the registration charges are covered. It means that the borrower would not need to spend more money to register their bike or scooter.
- There is also the easy availability of 0 downpayment loans. A 0 downpayment loan is a financing option where the lender pays the entire cost of the two-wheeler. Normally, one would have to pay 5 – 20 % of a two-wheeler’s MSRP as a downpayment. But a 0 downpayment loan keeps the borrower from paying a single penny upfront. However, there is also a downside to 0 downpayment loans. Since the lender is spending its financial resources, the borrower would have to bear steep EMIs and interest rates.
- The interest rates of two-wheeler loans across India lie in the range of 9 – 26%. One can verify this information by checking the bike loan EMI calculator tools available on the websites of leading lenders. Whichever tenure + downpayment combination one selects, the interest rate on the tool will be in the above-mentioned range. What does this information indicate? Well, the interest rate range contained within the 9 – 26% mark means the loan will not be a financial burden.
- Lenders also follow pre-defined rules that compel them to offer borrowers low-interest rates. For example, if a borrower has a spotless credit history or a high credit score then the interest rate will be nominal. Furthermore, borrowers can also follow this tip. Applying for a loan from a lender with whom one has a longstanding relationship can lead to low-interest rates. Borrowers can also enjoy low-interest rates if they do not have any running debts from other lenders. Other factors that can let a borrower enjoy low-interest rates are their age, income source, bank statement, etc.
- Two-wheeler loans offered by banks and NBFCs are secured from the beginning. Unlike other forms of loans, financing a two-wheeler would not compel the borrower to use their property as collateral. The financed two-wheeler is taken as collateral by the lender for the two-wheeler loan.
- Lenders in India offer two-wheeler loans with long tenures that can span up to 5 years. It means that irrespective of one’s financial abilities, one can buy a two-wheeler. Furthermore, the borrower can pay back the debt at a pace of their convenience. However, there is a downside to loans with long tenures. The interest rate charged by the lender for a loan with long tenure will be high. Please consult with the loan officer and clarify all lingering doubts before signing the dotted line!
- Almost all two-wheeler showrooms in India have tie-ups with leading financial institutions. It means one would not even have to apply for a loan before stepping into a two-wheeler dealership. All financing formalities will be completed onsite and one can ride their two-wheeler home the same day!
- Lenders these days need a few pertinent documents to approve a two-wheeler loan. On top of this, borrowers have the option of applying for a loan from the comfort of their homes. Pertinent documents for the two-wheeler loan can also be submitted by the borrower remotely.
All of these convenience factors readily point out why people prefer to finance their two-wheelers. For more details, feel free to consult with a professional financial advisor.
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