Two-wheeler Loan Interest Rates and GST Charges

Two Wheeler Loan GST and Interest Rates:

As a country, India is amongst the largest manufacturers of two-wheeler vehicles across the globe. Consequently, as a mode of transport, bikes are not only easily accessible but also equally affordable. Subsequently, these reasons are also responsible for making them the most endorsed category of vehicles among vehicle-owners in the country. Though they are comparatively budget-friendly in relation to the other classes of vehicles, the majority of these motor vehicles’ price range continues to be above the pay scale of the average middle-class inhabitant in the country.

As a result, interested individuals often opt for taking the motorbike loan route to purchase the vehicle of their choice, whilst also simultaneously ensuring that their finances stay in check as well. With the TW market in India undergoing a perpetual rise, the trends that these vehicles generate in the market space will not die out any time soon. However, these finance options are not issued tax-free. Under Indian tax regulations, borrowers have to pay certain GST Charges while availing of money lending services for any particular TW vehicle out there. This is akin to the loan charges that one pays while drawing a home loan or an education loan, or while depositing the GST on Gold loan, or jewellery in general. Before we dive into the various steps involved in this process, let us first try and understand the fundamentals of this pipeline.

Standard Documentation Required for Applying for a Two-wheeler Loan:

Before you proceed with the application for a two-wheeler loan, you need certain documents ready at your disposal to proceed with the application. These documents have been listed below for your reference:

• The complete loan application.
• A set of passport size photographs.
• Photocopies of passport or driving license or voter ID card or PAN card, or any corresponding piece of document that doubles up as a proof of identity.
• Photocopies of Electricity Bill or the Telephone bill, or any corresponding piece of document that doubles up as a proof of residence.
• Photocopies of your passbook, or your bank account statement, or your salary slip for the past 6 months, or any corresponding piece of document that doubles up as a proof of income.
• Salaried employees must furnish their IT returns, or their Form 16 photocopies for the past two financial years.
• Self-employed working professionals are required to furnish their IT return for their past three financial years.

How can one avail a two-wheeler loan?

There are primarily two mechanisms, using which an interested candidate can apply for a TW loan:

• Online - Most banks and NBFCs grant you the convenience of applying for a loan online, from the comfort of your homes. Additionally, they also provide you with other handy tools such as two-wheeler loan EMI calculators. You can compute the sum that you have to deposit monthly to repay your loan. Upon selecting the scooter or motorbike of your choice, you will get to view the loan amount, post which you can specify a tenure and rate of interest that is best aligned with your interests.

• Offline - Alternatively, you can directly approach the bank and fill out the loan application then and there itself in the presence of their representatives to register yourself for a two-wheeler loan. This alternative gives you the scope of negotiating your tenure and loan rate in person. Moreover, with more and more dealers tying themselves up with financial dealers these days, you now also have the option of applying for the loan directly while making your purchase.

Impact of GST on Motorbikes:

Although no GST charges are levied either on loan repayment, or when the applicant pays the interest on the loan, it does extend to pre-payment charges, processing charges, and other personal loan charges that are paid by the applicant to the lender or the bank in consideration. Consequently, the announcement of the Goods and Services Tax reform initiative in India manifested itself directly in the change of prices of bikes and two-wheelers all across the nation.

• According to the new GST rule, bikes with engines under 350cc are now being taxed at a rate of 28%. Under the old regime, these models were being taxed at 30%. As the taxation will occur at a single rate, it effectively has stopped the system of multiple small taxes associated with the previous structure.
• Motorcycle possessing engine capacities upwards of 350cc are bearing an auxiliary cess of 3% that is being levied on their already existing base tax rate of 28%. Even at that, the new system brings about a noticeable reduction in these bikes’ overall cost, which under the previous tax structure was getting charged between the rates of 28% and 35%.
• With the implementation of GST, the cost of electric vehicles has shot up. Additionally, the expenses that one used to bear on the service side of things have also witnessed a hike. The 28% rate of tax on spares that is currently in place holds testimony to that fact

Charges associated with two-wheeler loan interest rates in India:

The various charges that a scrambler loan entails in India have been listed below for the reader’s convenience.

• Processing fee - The minimum processing fee that is charged by most banks in the case of two-wheeler loans in India ranges between ₹0 to ₹1,000.

• Insurance Premium - Although TW loans are secured loans, most applicants prefer to have an insurance policy in place while availing the loan. The premium charged on this insurance varies from one bank to the other based on the range of risk factors covered under each of these policies.

• Pre-payment Charges - Most banks subject applicants to a foreclosure charge in the event of the repayment of their entire loan amount before the stipulated time. These charges mostly span in the range of 0-3%.

• Down payment - To ease the amount of your down payment figure, most banks across the nation provide auto loans starting at 80% of the on-road price of the vehicle.

Motorbikes loan interest rates as of 2021:

The following table presents a comparative analysis of the two-wheeler loan interest rates provided by the different banks in India.

Opt for Shriram Finance:

The following reasons shed light on why Shriram Finance should be your financial institution of choice while drawing out a two-wheeler loan:

• India’s largest TW financier.
• Provides tailor-made motorbike financing solutions in a quick and hassle-free manner.
• Offer up to 100% financing of the on-road price of your desired scrambler.
• Nation-wide presence, and round the clock service at your disposal.

With Shriram Finance at your disposal, you not only get to avail the best range of interest rates for your loans, but also the promise of getting all these processes expedited at the earliest.

Whether it is a personal or a housing loan requirement to achieve your life goals and secure your dream house, or an educational loan to fulfil your passion, our range of prompt financial services will always have you covered. Additionally, our gold loan schemes offer users the best gold loan per gram rates while taking a loan against jewellery.

We aim to resolve the complications associated with procedures and documentations that can make it seem like taking loans can be a difficult task. With our hassle-free and easy processing we make sure to ensure that you can reach one step closer to the destination of your choice.