Why You Should Avoid Buying Two Wheeler On Personal Loan?

The ever-increasing population of India has made traffic jams a common occurrence in cities all over the country. Daily commuters need an alternative to buses and cars to easily navigate the traffic congestions without wasting hours travelling to and fro their workplace. Bikes have emerged as a cheap and optimal solution in India's commuting landscape.

The various financial support options available for the purchase of any two-wheeler makes this form of transportation accessible, especially among the middle-class population. Choosing the wrong type of loan can put you in quicksand. Therefore, this article elaborates on the reasons why avoid to buy two wheelers on Personal Loan.


Personal Loans For Two Wheelers


The option of personal loans for the purchase of a two-wheeler provides a significant amount of flexibility to the borrower. You can use the loan money as per your choice. However, some lenders may impose restrictions on their utilisation.

These loans are usually unsecured, which means that you don't have to sign up for any collateral to secure the funds. While personal loans have their benefits, there also lie drawbacks to them that can cost you heavily.


Why Avoid To Buy Two Wheeler On Personal Loan?


If you require a loan amount that is more than your vehicle's cost, opting for a personal loan is ideal as you do not have to give the lender any explanation. But, these loans come with high rates of interest, some even beginning at 11.25%.

Since personal loans are unsecured, a robust credit profile becomes a necessity to avail of them. Moreover, the condition of no-collateral is the reason why these loans have such soaring interest rates.

Since the interest rates on personal loans are so high, these should not be considered an option for purchasing two-wheelers unless there is a dire need for money more than the two-wheeler's final price.


A Suitable Alternative: Two-Wheeler Loans


In contrast to a personal loan, a two wheeler loan covers just the cost of the vehicle. Two-wheeler loans are essentially tailored for the purchase of two-wheelers, and hence, the borrower does not have to undergo any additional hassle. Two-wheeler loans are the most effective and practical option for individuals who do not need additional funds apart from their vehicles' cost.

They offer a lower interest rate than personal loans since the former fall under the secured loans category. Having an average interest rate of around 9%, financial institutions cover almost 100% of the bike's on-road price in addition to the registration and insurance in many cases.

As mentioned before, two-wheeler loans are secured, the two-wheeler you are buying has to be pledged as collateral, and failing to repay the loan will give the lender the rights to sell the bike to pay off the loan. These loans support the partial or complete cost of purchasing the vehicle. It also avoids having to arrange more funds if you default on your loan repayment.

This way, you will not lose any additional amount of money. While the tenure of personal loans is longer, two-wheeler loans generally have a repayment period of up to 4 years, which is reasonable.




Even though both the loans meet the financial goal of arranging for funds to facilitate two-wheelers' purchase, two-wheeler or bike loans are a preferable choice if you want to maintain a strict budget and avoid any chances of defaulting.

Its low-priced interest rates also help you pay off your EMIs faster, thus freeing yourself from the burden of debt. That said, in case your needs exceed the price of the two-wheeler, you can opt for a personal loan. But you must always conduct a thorough evaluation of your finances before making that decision.

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