Indians are becoming more prosperous and hence two-wheeler sales have shot up to approximately 20 million units a year. More bike manufacturers are heading here, especially premium and luxury vehicle makers; mass manufacturers are also bringing new models to appease Indian aspirations. As one of the growing economies, India is a key destination with high motorcycle purchasing power.
However, India is not a country with a high savings rate; therefore, the most convenient line of credit for motorbike purchases is loans from NBFCs and banks. Bike loans are easy to get and easier to repay with affordable terms. Access to formal credit reduces dependence on informal moneylenders, who charge exorbitantly high rates of interest.
While loans are often a headache till repaid, the borrower can get some benefits such as a better credit score and easier access to more credit in the form of top-up loans for two-wheelers.
Why People Get Bikes on Loans
Owning a bike represents a higher social position. It's the perfect vehicle that provides liberation from dependence on public transport and is big enough to ferry family members. A bike is much more affordable than a four-wheeler while allowing the owner to hold up their head in pride.
A bike is an affordable purchase option for people of different age groups. Whether a person has just got a job or a small family requires it for mobility, a bike is enough to meet both. An underrated consumer segment for two-wheelers is women. Two-wheelers provide a safe mode of transport and empower them to pursue gainful employment. Nowadays, many people dream of traveling across the country and even to others, on bikes. Biker gangs are providing a sense of community to two-wheeler owners.
These are the groups of consumers who typically need two-wheeler and top-up loans for bikes. They either have low savings or their small investments are not very liquid. Some of the savvier folks prefer using education loans and even bike top-up loans to improve their credit scores, and avail of bigger loans for purchases like new homes and cars, in the future.
If a borrower finds the loan amount sanctioned inadequate to meet expenses connected with the bike purchase, they can apply to have a top-up loan for a two-wheeler from the same institution. The institution dispenses more money to the borrower, over and above the existing loan. Typically, the mortgage on the bike continues.
How to Get Bike with Top Up Loan
Most financial institutions use technological advances to speed up the processing of two-wheeler loan applications. The criteria to avail of two-wheeler loan top-up are the same as getting the base loan:
- The loan applicant should be an Indian citizen aged between 21 and 59.
- Applicants for bike top-up loans who are salaried should have worked for one year with a monthly income of at least Rs. 12,000.
- Self-employed bike top-up loan applicants should have run the same business for over two years.
- The applicant should have lived in the same residence for over a year.
- To ensure that the borrower will be able to repay the loan, the institutions usually require a declaration of any pre-existing debt and also want to see financial records to ensure that there is no cheque bounce in the preceding year.
- The borrower should have repaid on time for the preceding year.
Sometimes, the original loan amount may have been sanctioned a little lower for various reasons. If the borrower maintains a good repayment track record over the previous year, then the financial institution may provide the top-up loan. The top-up loan for a two-wheeler may be needed if the EMI commitments exceed the original schedule or there are certain extra obligations.
Advantages of Bike Loans
There are many advantages to buying your dream two-wheeler on loan. The biggest one is that you don’t need to have a savings fund and can get your two-wheeler home very quickly, just when you need it. The funds of a top-up loan for a two-wheeler are disbursed much faster. This convenience of buying a bike at any time has helped many people earn second incomes as delivery executives, besides reaching locations that aren’t served well by public transport.
Sometimes people run short of funds to repay the loan EMIs later, whereupon, the bike top-up loan comes in handy. Bike top-up loans keep the emergency savings funds intact since they can be repaid in a convenient schedule, unlike an emergency fund that takes time to rebuild.
The best thing about a top-up loan is that the overall interest remains a lot lower than availing of a personal loan to meet the obligations. Top-up loans do come with specific end-use obligations unlike personal loans, and there is also a cap on the amount that can be sanctioned. However, the loan tenure also increases, thereby making things easier to manage.
Applying for a motorcycle loan can also help with tax breaks as EMIs can count as deductions. Some self-employed people buy the two-wheelers in the name of their business to get rebates on expenses of maintenance and fuel to reduce tax liability. All of this frees up money to be invested for great returns rather than encroach upon savings.
Yet another benefit of taking loans is the discipline they bring about. Financial discipline is an important thing for most young borrowers to learn. The auto-debit of an EMI forces one to plan carefully in all aspects of life and keeps funds aside for all important needs. When you have a top-up loan to repay, you are likely to take extra care of your bike and the repayment, since you don’t want it repossessed.
All the above actions ultimately improve credit scores, something we have already mentioned. A good credit score helps you access other loans for cheap interest rates over time. A top-up loan for a two-wheeler purchase gives even more chances to improve credit score by prolonging the credit history. Further, you don't have to panic when you don’t have funds for additional bike-related expenses and go begging friends to lend you money. Shriram Finance can do it and you also end up with a higher credit score when you have finally closed your loan.
If you return to the same lender who gave you your bike top-up loan for home loans, etc., in the future, you can get lower interest rates and a more flexible repayment schedule than others. Since the lender knows you, they are more likely to work closely with you to ease matters for you.
If you want to buy a two-wheeler, all you have to do is check out the details of the bike loan, and get the documents ready. Shriram Finance gives long repayment tenures of 12–36 months at affordable interest rates. If you are worried about EMIs, then talk to an agent about getting a top-up loan. The loan approval process is automatic, quick, and hassle-free.