The need for bike ownership today is more pressing than ever given the increasing traffic across cities and towns as well as resurfacing social distancing norms. Having a bike allows you to navigate through thick traffic while saving time and ensuring safety of travel during the pandemic. Consequently, given that bike loans with low to no down payment are available with ease today, financing such purchase has become convenient too. For instance, you can easily purchase a Hero bike with low to no Hero bike down payment.
Nevertheless, the financing comes with its own sets of responsibilities one must abide by to ensure improved profile for future credit availability. It is thus essential that you know critical details about the loan for informed borrowing. Below are the necessary details to gather when seeking funding for bike purchase.
Two Types of Bike Loans Based on Hero Bike Down Payment
Bike financing is available under two types based on the down payment option provided by lenders. They include the following.
Bike loan with down payment
Conventionally, financial institutions provide bike loans as secured advances and financing is approved only after you have made an upfront payment of a suitable amount as down payment. Hero bike down payment requirement or that for any other bike purchase is made to ensure financial stability of the borrower and a reduced lending risk. So, if the cost of the bike is Rs.80,000 and the lender is ready to provide only up to Rs.75,000 as loan, you need to meet the remaining cost, i.e., Rs.5,000 from your pocket known as down payment cost.
Bike loan with zero down payment
Lenders have also introduced bike loans with zero down payment in the form of 100% bike finance for borrower’s convenience. Under this loan arrangement, the amount of bike loan matches the cost of your bike, whereby the lender bears 100% financing of such purchase. Individuals who are not willing to make Hero bike down payment or falling short of personal funding for such payment can choose a bike loan with zero down payment.
The catch to availing this type of bike loan is that you must hold a high credit score, a clean record of previous repayments with zero delays or defaults, amounting to a high creditworthiness.
Thus, if you are purchasing a Hero bike, you can choose between either 100% bike financing or with Hero bike down payment. You must choose from the two available options based on your financial standing and assessment as per future repayment requirements.
And other important aspects like –
- Interest rate applicable: Interest rates for bike loans can vary depending on the down payment type involved. If the lender is providing loans with zero down payment, a 100% financing also increases their risks, thus attracting higher rates. Comparatively, loan involving upfront payments come off affordable.
- Total interest payable: Since the loan amount in these two financing types differs, the total interest payable is also affected. For 100% bike finance, borrowers can experience higher interest accruals than its alternative.
- Overall affordability: The first two aspects affect the overall affordability of these loans, which means you must select either based on your financial standing and repayment capacity. Nevertheless, using ways to reduce interest rate levy can work in favour of both these types, helping secure affordable bike financing.
- Tenure options available: Given that approval for the two types of bike loans differs as per one’s creditworthiness, tenure availability can differ in flexibility too.
It is wise to understand the concept of LTV for Bike Loans, which refers to the total funding available as a percentage of the vehicle’s current market price. While for bike loans with zero down payment it stands at 100%, you can avail a two wheeler loan in New Delhi, Chennai, or any other city at a maximum LTV of up to 95% with wise lender selection.