Purchasing a bike involves huge upfront costs, especially if everything will come out of your pocket. You don’t just have to pay the amount stated by the manufacturer for the two-wheeler. Instead, the overall billing price includes insurance fees and registration charges. As a result, most people opt for a finance option to cater to the high bill amount. Bike loans are quite common nowadays where lenders cover 80% to 90% of the total amount.
However, you will have to pay the upfront amount of 10% to 20% during the purchase, also known as the down payment. Although this is a standard policy for most lenders, you can exempt this by opting for a zero down payment bike loan. It will help you easily get 100% coverage for the two-wheeler’s entire billing amount. Having said that, here we have created a detailed guide on a zero downpayment loan on two-wheeler works and its associated benefits for the borrowers.
What are the benefits of having a zero-downpayment bike loan?
No upfront investment
Your lender will be covering the entire bike purchase cost, including the registration and insurance fee. Hence, you won’t have to pay anything from your pocket during the purchase. With no upfront investment required for the two-wheeler, you can manage your finances better.
Immediate ownership
Let’s say you have planned to purchase a bike where you may have to bear 10% of the purchase cost. You may have to wait for months to have that much account balance before purchasing the two-wheeler. However, with a zero downpayment loan, you can instantly purchase the bike once the loan gets approved. This will give you immediate ownership of the two-wheeler without you having to wait for months.
Better cash flow maintenance
You won’t have to deplete your bank balance to purchase the bike. Rather, you can utilize the funds for more priority work, like purchasing the accessories you will need for riding the bike. This way you can manage your cash flows seamlessly without worrying about anything.
Lesser financial burdens
Having a zero down payment bike loan will incur minimal financial burden on you at the time of purchase. Whatever loan amount you will take can be repaid in monthly installments as EMIs. You won’t have to worry about any immediate finances from your end.
Special deals and offers
Some lenders also offer lower interest rates on a zero-downpayment loan for two-wheelers. You can even use the two wheeler loan EMI calculator to verify which interest rate or tenure slab will be best for your finances. Accordingly, you will be able to choose the lowest EMI option so that there won’t be any credit risk in the future.
How to choose the best zero down payment two-wheeler loan?
With so many different lenders offering zero downpayment loans for two-wheelers, choosing the best option can become overwhelming. You wouldn’t want to make a hasty decision that would cause more financial burdens going forward. So, here are a few tricks you can use to decide which loan option is most feasible for you.
- Always check the repayment tenure options for the two-wheeler loan. Usually, people consider longer repayment periods as that can lower the EMI amount. However, interest rates will be higher. So, you should check if the chosen tenure can help you pay off the EMI without compromising your daily finances.
- You must go through the terms and conditions proposed by your lender. This will help you to know more about the processing fees incurred on the two-wheeler loan. Also, you will get to know about the penalties and late payment fees in case of missed or delayed EMI payments.
- Use a two wheeler loan EMI calculator to check if the proposed amount is within your budget or not. Ensure it is not more than your affordability based on the monthly earnings. If that’s the case, your debt-to-income ratio will increase, thereby negatively impacting the credit score.
What are the challenges of a bike loan with zero down payment?
- With a zero downpayment loan, the overall amount to be repaid will be high. As a result, your monthly EMIs will be higher also.
- Most lenders charge a higher interest rate on zero downpayment loans. This is to mitigate any credit risks from the borrower.
- Repayment tenure can be extended further. Hence, you will have to continue to pay the EMIs for several months.
Conclusion
It’s indeed true that a zero down payment bike loan can be beneficial in many ways. For example, you won’t have to pay any upfront lumpsum amount or bear more financial burdens at the time of purchase. However, it also comes with a few challenges like higher EMI amounts or higher interest rates. So, you should plan your finances accordingly and ensure your credit score won’t be impacted by any means.
