Are you looking to buy your favourite bike? Are you wondering if you should take a loan? Not sure if you should go for a longer tenure loan or keep it short and simple?
Two-wheelers are no longer a luxury but a necessity in today’s fast-paced life. A bike ensures a safe and convenient commute to your work and leisure. It saves time and money spent on public transport. Navigating through crowded city roads is much easier with your two-wheeler at your disposal.
While buying a two-wheeler, you need not break your savings when easy loans are available at attractive terms, e.g. affordable bike loan interest rates, convenient EMIs, choice of the loan tenure.
Your two-wheeler loan eligibility depends on your income, employment, age, current debt, and credit score. Loan EMI payout depends on the tenure you opt for. Two-wheeler loans are available for different terms. While a longer tenure reduces your monthly EMI payout, you must consider a shorter tenure for the following reasons:
- Faster Processing: A lower tenure loan means a lower risk for the lender. The more prolonged the loan runs, the higher the time the lender has loaned funds to you, and the risk of default is higher. Therefore, the credit approval takes less time for short-tenure two wheeler loan, and the documentation is more straightforward. Check your Two Wheeler Loan Eligibility here.
- High-Interest Payout: When the loan tenure is higher, a large part of your EMI in the initial years goes towards interest payment. The EMI has a high percentage of the principal amount in a short duration loan. In effect, the total interest you pay is much lower when the loan is for a shorter duration. Check Bike Loan Interest Rates here.
- Faster Repayment: From a personal finance perspective, keeping your debt obligation to a minimum is advisable. If you have a high disposable income, you can pay a higher EMI and pay off the loan earlier than stretch it by a few more months.
A longer tenure loan also means liability for a longer duration. A loan repaid is an obligation done away with, ensuring a good credit score. You need to service the loan dutifully with a longer tenure loan without any default. Any EMI delay or default can impact your credit rating and future loan eligibility. Use the Bike EMI Calculator and check your monthly outflow to select the suitable loan tenure.
- Early Closure: Many times, borrowers take longer tenure loans but realise in a few months that they can foreclose the loan earlier, as their income goes up. Early loan closure attracts a penalty or fee if you prepay the loan. Therefore, choose the loan tenure wisely with a future outlook and not just your current financial circumstances.
- Better specifications: Technology is advancing at lightning speed, and vehicle technical specifications and design. Every few months, a new bike launches with attractive designs and better performance. For example, electric vehicles are the latest craze today, nonexistent a few years ago.
In future, you may want to upgrade to a more stylish bike with better specifications as your income and lifestyle change. If you have a long term loan, you will have to close the loan first with additional paperwork. A better option is to opt for a short term loan.
To conclude, if you can afford to pay a higher EMI, opt for a short tenure loan for a lower interest payout, close your debt obligation faster and keep your options open for bike upgrade.
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