You could have been eyeing your dream bike for a while now. Or, have you been saving up for years to buy a scooter for daily commuting? Whichever be the case, if you can manage to make that initial down payment on your own, then a two-wheeler loan can help you sail through the rest of the payment.Most dealers have tie-ups with different financing companies that readily offer loans toprospective customers, provided they meet the criteria for loan approval.
Wondering how a two-wheeler loan can help? When you do not have the full amount to buy the vehicle of your choice, you can take a loan and payback in instalments. This way, you can buy the two-wheeler without disrupting your financial commitments. However, you must ensure that you have enough funds to pay the monthly instalments on time for a fixed tenure. So, before you apply for a loan, it is important to know how much you will have to pay as EMIs and for how long.
Factors affecting a two-wheeler loan EMI
- Interest Rate
- Loan Principal
- Tenure of the Loan
Higher the down payment, the more you can save on the interest amount. If you can afford it, then that might get you the best deal. However, if you do not wish to part with liquidity then you may opt for a lower down payment. Some financers even allow a zero down payment loan. However, remember, low EMIs and a long loan tenure will entitle a higher interest as the risk for the lender is high. All these will also depend on the lending terms and conditions, market fluctuations, your current financial status and other financial liabilities.
Formula for calculating EMI
P × r × (1 + r)n/((1 + r)n – 1)
P = Principal
r = Rate of Interest
n = Tenure of the Loan in Months
Or, you may use an online bike loan EMI calculator to reach the figure that you would be expected to pay for your two-wheeler loan.All you need to do is enter the three parameters and the answer will appear in a matter of few seconds.
Benefits of using abike loan EMI calculator
Easy comparison between different types of loans
Once you know the EMI, it would be easy to compare loansfromdifferent lenders, helping you make an informed decision. However, do not forget to check thecredibility of the lender and hidden fees involved before you strike a deal.
Project your finances and manage other financial commitments
With an EMI calculator, you can easily projectyour finances and plan how to manage them. You can gauge the affordability of a particular type of loan. This will reduce the risk of default or stop you from making the wrong financial decision. Remember that non-payment of dues may affect your credit score, making you an unattractive prospect for lending money in the future.
Avoids room for error
Unless you enter incorrect parameters, a calculator will not give erroneous answers. It is user-friendly and quick, making it easy to compare EMIs. In case of manual calculation, there is a possibility of making a mistake and the results could be unfavourable for your financial planning.
Leverage benefits of knowing EMI in advance
When you know the EMI beforehand, you can chalk out a financial plan for until the tenure of the loan is completed.You can leverage benefits by planning investments in a hot market opportunity instead of merely paying off the loan amount.
Conclusion
While selecting a two-wheeler, it is important to keep your end use in mind. Do not choose a two-wheeler simply because it belongs to a fancy brand. Instead, opt for the one that is suitable for Indian roads as well as is light on your pocket.Availing a bike loan has become easier, especially with many options available in the market. In case of surplus funds, you can easily foreclose the loan with some additional fees. However, do not opt for foreclosure when you are almost at the end of the tenure as it will not save you any interest amount.
Today, lenders offer flexible options with faster processing modes and hassle-free documentation. Choosing a lender with whom you have had a past financial relationship will make it easier for you to negotiate for better rates.Do your research and choose the best.
