A bike is one of the most convenient vehicles for everyday transportation. However, either because of financial circumstances or too expensive prices of certain bikes, many individuals are unable to fund their dream of buying a bike. In such scenarios, individuals can consider applying for the best bike loan in India that will provide them with the best financial assistance.
Finding the best bike loan can be a difficult task for many people. One of the important factors to consider while applying for a bike loan is interest rates. To ease your bike loan selection procedure, we will discuss some essential factors that one should consider before applying for a bike loan.
Table of Contents
Select the Suitable Type of Interest Bike
Individuals applying for bike loans often find two types of bike loan interest rates. Fixed interest rates and floating interest rates are the two popular interest rates for two-wheelers. Both types of interest rates have their own benefits and risks. Choosing the right type of bike loan interest rate that aligns with your financial situation is essential to reduce any financial burden.
Fixed Interest Rates
Fixed interest rates are stable interest rates throughout the loan tenure. Fluctuation in the market interest prices will not have any effect on your monthly instalments. However, the interest rates are somewhat higher compared to floating interest rates. Also, the borrowers will not get the advantage of low payments when there is a drop in market interest rates.
The predictability of loan repayment at a fixed interest rate allows borrowers to manage their finances effectively, without being stressed about the market interest rate volatility. Therefore, if you cannot manage the uncertainties in your monthly repayment then fixed interest rates are the correct choice.
Floating Interest Rates
Floating interest rates are also called adjustable interest rates and their interest rates are not stable. Any fluctuation in the market interest rates will influence your loan. This means if the market interest rate rises, the borrowers have to pay extra.
The advantage of adjustable interest rates is that borrowers get low interest rates in the beginning. Also, if the interest rate drops, they will enjoy the benefit of lower repayment. Therefore, if you are comfortable repaying a little extra amount when interest rates rise, then floating interest rates are the right choice.
Tips to Avail Favourable Bike Loan Interest Rates
The decision to purchase a bike is an exciting experience for everyone, and finding the best bike loan with affordable interest rates makes this experience more thrilling. Here are a few tips that will help you avail favourable bike loan interest rates:
Maintain a Good Credit Score
Banks often check clients’ credit scores before sanctioning loans. Borrowers who maintain a good credit score history are assumed to be reliable clients by lenders. Thus, if you want to apply for a loan, maintain your credit score.
Select the Appropriate Loan Tenure
Selecting the right loan tenure is crucial, as it helps to lower the interest rates on the outstanding amount of the loan. A short loan tenure offers a low interest rate but the monthly repayments are high. Whereas longer loan tenures reduce the monthly EMIs but increase the total interest rates. Thus, choose loan tenure wisely that aligns with your finances.
Compare Lenders and their Interest Rates
The lenders have the right to decide the interest rate on loans, within the approved limits set by the Reserve Bank of India (RBI). Hene, different banks and financial institutions offer different interest rates. Therefore, do your research, compare interest rates, and choose your financier wisely that offers competitive interest rates.
Bike Loan EMI Calculator
The bike loan EMI calculator is a financial tool that helps you calculate your bike loan EMI and interest rates in advance. Using it is very simple. You just need to enter the values and you will get the results. Simply enter the outstanding loan amount, annual interest rate, and loan tenure. You will find your monthly EMI amount instantly. Moreover, users can calculate different loan amounts, interest rates, and tenures to find what suits their financial situation.
Conclusion
Finding suitable bike loan interest rates is crucial when buying a bike. There are two types of interest rates, fixed and floating. Fixed interest rates offer stability but are high. EMIs don’t decrease when rates drop. Whereas, floating interest rates offer low EMIs initially or when rates fall. However, EMIs are high when rates rise. Check both types of rates and pick the one that suits you. Moreover, maintain good credit scores, select the right tenure, and compare lenders. Also, use loan EMI calculators to find EMIs for effective budget planning.
References
https://www.shriramfinance.in/article-choosing-the-right-two-wheeler-loan-based-on-interest-rate
https://www.icicibank.com/personal-banking/loans/two-wheeler-loan/emi-calculator
https://www.iifl.com/blogs/personal-loan/personal-loan-vs-bike-loan
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