Whether a fresher just out of college with a newly landed job or family guy with all the responsibilities on your shoulders, whether you live in a small town with no traffic or a big metro with snail-speed traffic during peak hours, a bike is always all-weather friend of a man! Be it for running errands, rushing to office to reach on time or take a long-ride outside city limits, bike remains the favourite mode of transport for all generations, all the travelling needs and even leisure. As compared to the four-wheelers or cars, bikes provide a cheaper and economical option for commuting. There was a time when only rode the bikes. In today’s India, the women are also nowhere behind than men. After all, Why Should Boys Have All the Fun; which is also the tagline of one of the most famous female-specific scooter model “Pleasure” from Hero. With equal demand from both the genders in the second-most populated country on Earth, India’s two-wheeler market is at its best with an offering for anyone and everyone across all age groups, income groups, purpose and design.
Two-Wheeler Loan or Bike Loan
Two-wheeler loans were introduced in the Indian market so that everyone could achieve their dream of having at least one two-wheeler in their garage. Two-wheeler loans are purpose limited collateral loans made for just one purpose: help an individual buy a two-wheeler by providing the required sum of money in a quick, easy and hassle-free manner. As of today all the top financial institutions in India such as banks and NBFCs provide credit solutions for buying a two-wheeler. With a bike loan you can get financing for up to 90% of the cost of the vehicle, which often also covers additional costs such as accessories, registration and insurance, while the remaining 10% to be paid as down payment out of your pocket. The 2 wheeler loan providers also have tie-ups with all the bike dealership to provide the best finance options. Since the lender provides money for up to the 90% of the price of the bike, you need not empty your savings, or borrow from anyone just in case you do not have sufficient amount of money saved up. But just in case you end up saving enough or increase your income, you may also prepay a bike loan without any prepayment penalty. Also you need not be earning in millions as these loans are available to even those customers who have an annual income as low as ₹50,000. The tenure of the bike loans vary between 12 to 48 months which is enough to repay the entire loan without affecting much of your budget. Since the EMIs are low there are fewer chances of you defaulting on the loan. Hence 2 wheeler loans are a great option to build your credit history and have high CIBIL Score, without disrupting your finances. However, loans for two-wheelers are secured loans and the vehicle remains mortgaged throughout the tenure of the loan; which means that should you become unable to repay to loan, you will have to forfeit your vehicle to the lender who will auction it to recover its money.
Personal Loans
Personal Loans are open-end financial instruments which an individual may avail to overcome the financial shortage and repay the borrowed amount over the tenure of up to 60 months at a very low rate of interest. Personal Loans are also collateral-free loans, which mean that the borrower does not need to mortgage any asset against the loan to the lender. An individual, as long as they satisfy the required eligibility criteria, can opt for a personal for any sort of purpose, such as renovating home, pay for higher education, buy a gadget, travel, wedding expenses, medical emergencies, debt consolidation, repay credit card outstanding or even just to part (we highly advise against it). Personal Loans are offered for a tenure ranging from 12 months to 60 months at low interest rates, which mean low EMIs. This helps an individual to gradually come out of the cash crunch. The loan amount availed is immediately made available to the borrower which they can use for any purpose anytime. There are no binding criteria to use the borrowed amount immediately for a fixed purpose. Hence this makes personal loans very flexible in terms of use. Should a borrower recover quickly from the crunch, before the loan tenure is over, they may prepay the personal loan without any prepayment penalty or foreclosure charges. Personal Loans are available from ₹50,000 to ₹2,500,000 with all the FIs in the country, be it a bank or NBFC or any other credit union. Personal Loans are the most popular and most preferred credit solution in the country.
Quick Comparison of Personal Loans v/s Bike Loans
This quick comparison below will help you understand the difference between a personal loan and a bike loan.
| Criteria | Personal Loan | Two-Wheeler Loan |
| Secured/Unsecured | Unsecured | Secured |
| Purpose | Any personal purpose | Buy a bike/scooter |
| Loan Amount Range | ₹50,000 to ₹2,500,000 | Up to 90% of the price |
| Tenure in months (Min – Max) | 12 – 60 | 12 – 48 |
| Interest Rate Range | 10.99% – 33% | 9.05% – 34.08% |
| Prepayment Penalty | NIL | NIL |
| Required Min. Income | ₹15,000 pm | ₹50,000 pa |
So, why would it make more sense to buy a bike/scooter with a personal loan rather than a bike loan? Let us have a look in detail.
Reasons to Purchase a Bike with a Personal Loan
- Instant Online Availability
Personal loans are available online from many banks such as HDFC Bank, ICICI Bank, Axis Bank and so on. The personal loan through these banks can be availed easily just by going on their portal and applying online for it. The online availability saves both time and effort of the borrowers who had to visit the bank, again and again, to apply for a 2 wheeler loan and again run after them to get it approved.
- Interest not Dependent on the Bike’s Segment
Generally when you go for a two-wheeler loan the interest charged is dependent on the bike’s segment, for example when you go for a premium bike or a sports bike the interest charged is comparatively higher than the interest charged on the normal bikes. But the scenario is totally different when you go for a personal loan for a two-wheeler, the interest charged is totally independent of the bike’s segment and is charged according to your profile and personal loan interest rate. Hence buying a two-wheeler through a personal loan can be a good idea when you go for a bike with a higher price as in a two-wheeler loan the interest charged will be very high, somewhat near to 30- 35% depending on your bike, and when you go for a personal loan to purchase your bike it will cost you only 16% to 20% which is quite affordable compared to a two wheeler loan.
- Complete Financing with Personal Loan
In the case when go for a two wheeler loan to purchase your bike, the two-wheeler loan doesn’t provide complete financing. Which means you need to spend money from your pocket to buy the bike or any two-wheeler. But when you go with a personal loan or an online personal loan it provides you complete financing for your dream bike. So, you need not to worry even if don’t have money as personal loan finance your two-wheeler completely.
- Instant Ownership
The personal loan provides instant ownership for your two-wheeler as you get the money instantly that too in one short, hence you can pay it in one short to buy your bike. Whereas in the case of a two-wheeler loan the ownership will not come to you unless and until you pay the last EMI of your two-wheeler loan. The EMI which you pay for your personal loan is totally independent of your bike and its ownership.
- No Down payment
In case of purchase of a two-wheeler with a personal loan, there is no need of any down payment, personal loan provides you the full amount which is payable against the purchase of your dream bike. But when you purchase your bike/scooty with a two wheeler loan in case 20%- 30% the price of the bike or scooty need to be paid by you as a down payment this makes the purchase of a two-wheeler much easier with a personal loan as compared to that of a two wheeler loan.
- Borrow even without Credit History
When you apply for a two wheeler loan the creditor will definitely look for your credit score before lending you the amount. This is done to minimize the risk involved to the lenders regarding the repayment of the loan. the same is done in case of a personal loan also but what makes the difference is- when you go for a personal loan to buy a bike/scooty they may provide flexibility and get ready to lend you even at a bit high-interest rate than the normal one for a personal loan, this flexibility is rarely possible in case of a two- wheeler loan and they may disapprove the loan application with a low credit score.
- Simpler Eligibility Criteria
The eligibility criteria to avail a two-wheeler loan is a bit difficult than a personal loan as it is a secured loan and you may be asked to give a guarantor or collateral against your loan but a personal loan is a totally unsecured loan and you need not to give any security against your loan. This makes the eligibility criteria a bit simpler with the personal loan for the borrowers.
- Simpler Everything Else as well
Personal Loan has everything simpler along with the documentation process. In a personal loan, the documents required are minimum that too with the online documentation process in an online personal loan. The documents required as just for identity proof, address proof along with some bank statement which the applicants need to upload on the online portal of the lender. This makes the process quite easy and fast.
- Flexible Tenure Option
When you go for a personal loan for a two-wheeler you get a flexible loan tenure which totally depends on your repaying capacity. In general, a personal loan tenure is short as compared to that of a two-wheeler loan tenure. Even prepayments and pre-closure are also allowed with most of the lenders in case of a personal loan. All these flexibilities are not available in a two wheeler loan.
Now that it is very clear why should you opt for a personal loan to buy your dream bike, what are you waiting for? Just apply for an instant personal loan online here on Finance Buddha and go burrrrrooom-boom-boom-boom on your dream bike!
You must be logged in to post a comment.