Owning a two-wheeler can be an extremely convenient mode of transportation for everyone, whether in a city or in rural settings. To get to work or to college or just to run some errands, a two-wheeler can prove useful in all these instances and more.
And a two-wheeler is often the first vehicle owned by many individuals. Though two-wheelers are less expensive compared to a four-wheeler, generally two-wheelers are bought on loans. While two-wheeler loans are available to purchase a two-wheeler, there is another option in the form of personal loans that individuals desirous of buying a two-wheeler can consider.
Let us see if utilizing a personal loan for buying a two-wheeler is a good option.
Reasons Why a Personal Loan can Be a Good Option for Buying a Two-wheeler
Off late, personal loans are available rather easily from multiple lenders like banks, non-banking financial institutions, fintech lenders and peer-to-peer lending sites. Some of the other advantages of a personal loan over a two-wheeler loan are
1. 100% On-Road Finance
Specific loans to buy high-value assets like homes, two-wheelers or four-wheelers do not generally allow for 100% finance for the cost of the asset being purchased. They expect the customer to show their commitment by footing anywhere between 10-25% of the cost of the asset as an upfront payment.
However, when you go in for a personal loan, you can apply for a loan up to 100% of the cost of the two-wheeler without any need for a down payment. This is one of the biggest advantages of a personal loan over a two-wheeler loan.
2. Can Avoid Hassles of Hypothecation
When you go in for a two-wheeler loan, the bike must be hypothecated in the name of the lender till the loan is repaid in full. This is reflected in the Registration Card of your two-wheeler. Once the loan is repaid in full, the hypothecation details will have to be deleted from your RC book and the vehicle will have to be reflected on your name. All this involves a couple of trips to the Registering Authority of your vehicle and some hassles.
3. No Down Payment Needed
Depending upon the cost of the vehicle, the down-payment for a two-wheeler loan may run into a few thousand easily. Making arrangements for this amount could prove to be an additional burden on your existing finances.
On the other hand, if you go in for a personal loan, you need not pay down payment and get the entire amount required to buy a two-wheeler as a loan.
4. Faster Availability of Personal Loan
Two-wheeler loans may take time for disbursal as the lender would need to get details regarding the two-wheeler that you intend to purchase from the dealer and the other documents from your end to approve the loan. Then, there would be the usual loan approval procedures like verification from your employer, credit score check, etc.
However, with fintech lenders like Money View who can disburse loans in a matter of 2 hours post-approval, your bike can get home faster than you ever expected.
5. Lesser Documentation
The documents required for a personal loan are just your identity proof, address proof and your income proof which are held by any individual. Moreover, when you apply for loans with one of the best fintech lenders, then you don’t even have to submit hard copies of the documents which are generally required when applying for a two-wheeler loan. All you have to do is submit scanned copies on the app or website to get your loan approved and disbursed.
6. Available on lower credit score
Two-wheeler loans are generally available from banks or non-banking financial institutions. These lenders have a higher minimum credit score, generally, above 750 to get your loan approved. This might be difficult for those who are new to credit or have a low credit score due to various reasons.
On the other hand, online personal loans are available even to those with lower credit scores as they utilize their in-house credit assessment models to gauge the creditworthiness of their applicants. This makes credit accessible to a wider range of individuals.
7. Similar Rates of Interest
The rates of interest between a two-wheeler loan and a personal loan have become almost similar. Various banks and other financial institutions, both offer loans for two-wheelers starting from 10.5% onwards. So, the rate differential is not much. However, if your credit score is low, the interest rates may go higher.
However, online personal loan lenders carry out a comprehensive check of your creditworthiness using various data points that go beyond your credit score, so many more individuals will have chances of availing a personal loan.
These are some of the advantages that make availing a personal loan a great option for buying a two-wheeler. However, you will have to keep in mind some of the basics of availing any loan, like restricting a loan to the amount that you can comfortably pay back, being prompt in your repayment and keeping a gap between two loans.