With hundreds of banks and NBFCs offering bike loans with attractive interest rates, easy terms and a simple application process, financing a two-wheeler purchase has become easy. While buying a bike on EMI may be simple, some confusion remains about the down payment clause associated with such loans. To help clear the air, we’ve curated this comprehensive guide that will help you understand this aspect of a bike loan better.
What is a Bike Loan Down Payment?
When you apply for a two-wheeler loan, the price of the vehicle gets converted into manageable EMIs. However, the loan might not cover the entire cost of the bike, leaving you to deposit a certain margin amount to meet the deficit upfront. Thus, a bike loan down payment refers to the sum you need to pay upfront for the purchase. It is the out-of-pocket contribution you make to cover the margin between the sanctioned loan amount and the cost of the two-wheeler. A bike loan down payment essentially reduces the defaulting risk for the lender.
Is There a Minimum Cap On Down Payments?
Generally, minimum down payment requirements can range from 10%-30% of the bike’s on-road price. However, this requirement will vary as per the lender’s policies and the following factors.
- Cost of the bike
- Your repayment capacity
- Your credit score
- Your relationship with the lender
While putting down a larger initial deposit can help lower your debt burden in the long run, arranging even 10%-30% of the bike’s cost might be an issue for most. This is why some lenders now offer zero down payment bike loans that ease your down payment burden.
What is a Zero Down Payment Bike Loan?
Zero down payment bike loan is a bike finance option where the lender covers the entire cost of the bike, negating the need for any personal contributions. In other words, you don’t need to make any initial payments since the lender finances the total cost of the bike. However, it should be noted that some lenders might offer zero down payment bike loans only on select models, and a processing fee is applicable on such loans.
Why Opting for a Zero Down Payment Bike Loan is a Good Idea
Whether you’re a newly employed individual or someone with existing EMIs, arranging a large lump-sum amount for the initial loan deposit can be a hassle. Moreover, saving up enough to meet minimum down payment requirements can take a while, delaying your purchase by months or even years. A zero down payment loan helps eliminate both these issues. You don’t have to worry about gathering funds for the purchase or delaying it. With a zero down payment bike loan, you don’t have to choose between managing your liquidity needs and buying a bike of your choice.
Are Bike Loan Interest Rates Higher for Such Loans?
Bike loan interest rates depend on several factors, including the type of bike selected, your credit rating and income and the down payment amount. Generally, the interest rates might be slightly lower for borrowers making a high down payment. Opting for a zero down payment loan can raise bike loan interest rates as the risks of defaulting associated with the loan increase. Thus, to protect themselves against such loan defaults, lenders tend to raise bike loan interest rates applicable on zero down payment loans. For you, as a borrower, this would translate to a larger interest burden in the long run.
What are the Eligibility Criteria for a Zero Down Payment Bike Loan?
While the eligibility criteria for zero down payment bike loan will vary from one lender to the next, here’s a generalised list most lenders follow.
- The applicant must be an Indian citizen.
- The applicant should be at least 21 years old when applying for the loan. Some lenders set the minimum age at 18 years.
- The maximum age of the applicant cannot be more than 65 years at the end of the tenure.
- The applicant should have work experience of at least a year and a monthly income of at least ₹12,000.
- The applicant should have a favourable credit score, ideally 750 or above.
How Can I Apply for a Zero Down Payment Bike Loan?
Applying for a zero down payment bike loan is quite easy. Once you’ve narrowed down the lenders offering this loan facility, simply head to their websites to apply for the loan online. After you’ve filled in your online loan application, submit the necessary KYC documents like copies of your Aadhaar Card, PAN Card, bank statements, salary slips, ITR, etc. The loan amount will be sanctioned after the lender checks your eligibility and verifies these documents.
Summing It Up
Applying for a two-wheeler loan can help you bring home your dream bike without worrying about its cost. However, there is a down payment clause associated with two-wheeler loans. You have to pay around 10%-30% of the bike’s price up front, while the lender covers the rest. Lenders like Bajaj Markets offer zero down payment bike loans, where the loan covers 100% of the bike’s cost to ease this burden of lump-sum upfront payments. Apart from flexible tenures of up to 60 months, you also enjoy pocket-friendly bike loan interest rates that make your EMIs manageable and affordable.