Use a Personal Loan to Buy Your Two-Wheeler | Unity Bank
5 min read | 5 months ago
How To Use a Personal Loan To Purchase Your Two-Wheeler
Two-wheelers have evolved from being luxury items to modern-day necessities. A TransUnion CIBIL survey highlights how Generation Z (born after 1998) prefers two-wheeler loans above all other credit types. It is a testament to how this generation, which has already started earning, prioritizes scooters or bikes for commutes and traveling.
Are you also looking to purchase a two-wheeler anytime soon? You can consider an instant personal loan online for this purpose. Here’s learning more about how to use the same to buy your dream two-wheeler.
Understanding Personal Loans
There are various kinds of online loans available currently. Personal loans are mostly unsecured (do not require any collateral/security) forms of credit. These loans help with any purpose, including buying two-wheelers, home renovations, travel, higher education, medical emergencies, and more. They usually come with shorter tenures of 36 months or slightly more with competitive interest rates.
Assessing Your Financial Situation
Before comparing lenders to take an instant personal loan online, it is crucial to evaluate your financial situation first. Can you repay a personal loan? Select your budget and then research the interest rates of various lenders along with the average loan tenure. Calculate the monthly EMI payable on your loan and see whether it fits your budget. For this purpose, list your monthly costs and then subtract them from your income. The remaining amount will be your disposable income. You can allocate a part of this amount towards repaying your loan after setting aside funds for savings, investments, and emergency costs.
Researching Loan Options
Once you are sure about being able to repay a personal loan as per your desired budget, it is vital to check your loan options. It is more beneficial to choose personal loans in place of two-wheeler loans. Firstly, you will not have to make any down payment to the lender, unlike two-wheeler loans that require 15-20% of the bike value as the down payment. You can use a personal loan to cover the entire on-road price of the two-wheeler. Another advantage is that you do not have to hypothecate the bike to the lender until you repay the loan (which happens in the case of two-wheeler loans). It involves significant time and money. Afterward, you will also have to remove the hypothecation and get ownership of the bike. Use your loan to pay for the bike and register it in your name to avoid these hassles.
Compare online loans offered by leading financial institutions and banks. Keep a few parameters in mind like the interest rates, tenures, maximum and minimum loan amount, processing fees, and application process.
Applying For a Personal Loan
Once you have chosen your lender, it is time to apply for a personal loan. Most lenders have online processes that take only a few minutes. You will only have to fill out the form with your details and then upload documents to complete the process. Some documents include KYC documents (age, identity, and address proof) and income documents (salary slips, bank statements, Form 16).
Using The Loan to Purchase Your Two-Wheeler
The lender will verify your application and issue you an official loan offer. You have to accept the same and then set up the repayment mechanism for the loan. Once done, you will receive the funds in your account within a few hours or days, depending on the lender. After getting the funds, you can use them to pay for your two-wheeler purchase directly at the dealership.
Repaying The Loan
Remember that your loan EMI will start from your preferred date in the subsequent month after taking the loan. Keep adequate funds in your account to meet the EMI payment. At the same time, consider setting up automatic debits from your account to avoid missing payments. Even one missed EMI will negatively affect your credit score and lead to penalties and charges. Hence, adopt a responsible approach towards repayment. You can also select an EMI date close to your salary date. It ensures that the money gets debited early in the month before you start paying for other costs.
Conclusion
Using a personal loan to purchase a two-wheeler is a smart move. Not only do you avoid hypothecation costs and hassles, but you also get 100% financing without making any down payment. However, it is important to responsibly repay the loan to maintain a good credit score.
FAQs
1. Can I use a personal loan to make the down payment for a car?
You can use a personal loan for any purpose. It may include the down payment that you make for a car.
2.What are the interest rates on personal loans for two-wheelers?
Personal loan interest rates vary across banks and financial institutions. On average, they may range between 12-38% per annum.
About Unity Small Finance Bank
Unity Small Finance Bank is committed to making banking simpler and more accessible for everyone. Our services include Savings Account, NRI account, Current Account, Fixed Deposits, and Personal Loans offering flexible tenures and attractive interest rates. We also offer financing options like MSME Loans and Microfinance to support businesses and underserved communities. Learn more about Unity Small Finance Bank here.
