Business Finance

Is It a Good Option to Buy a Two-Wheeler With a Personal Loan?

No matter if you stay in a city or a village, the need of having personal transportation of some kind is of the utmost importance. While buying a four-wheeler might not be possible for everyone, wanting a two-wheeler is much more realistic. 

Although the COVID-19 pandemic is almost over, public transportation is still a major area of concern in most cities around India, thus increasing the need for personal transportation even more. If you are confused about how you can finance your two-wheeler and looking for options to do it right, this article is for you. 

In today’s article, we will share with you if it is a good option to purchase a two-wheeler on a personal loan. Let’s get started.

What Is a Personal Loan?

A personal loan in simple terms can be understood as a short term loan that allows you to meet any unforeseen or sudden financial needs. Unlike standard loans like vehicle loans and property loans that tie you to one spending purpose, the money from a personal loan can be used for any spending needs.

Features of a Personal Loan

Now that you know what a personal loan is, let us take a look at some of its most prominent features:

Ease of Access

One of the first and most important features of a personal loan is its ease of access. Thanks to the many lending companies in India, which specialize in rendering short term loans, getting a personal loan has now become easier than ever before. Along with this, most personal loan lenders have an online application process, thus making sure that you don’t need to worry about visiting an office or meeting with an agent to get your loan processed.

No Collateral Needed

While most lenders in the market ask for some form of collateral while processing your standard loan application, most personal loans do not need any form of collateral while applying. The reason behind this being, personal loan amounts are generally smaller in amount than other types of loans, and thus the exposure to loss for the lender is quite less even without collateral. 

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Spend Your Money on Anything

Unlike other loans in the market which put restrictions on spending the loan amount, you can use the money from the personal loan to spend on anything, be it to buy a  two-wheeler or finance your credit card bill.

For example, if you take a property loan of 5 lakhs, you can only spend that amount on either building materials or on construction work, but on the other hand, when you take a personal loan of 5 lakhs, you do not need to inform the lender of where you will be spending the amount, thus essentially giving the choice of spending the amount at your own discretion and choice. 

Low-Interest Rates

Most standard loans in the market come with a very high rate of interest attached to them. For example, a two-wheeler loan from TVS credit comes with an interest rate between 8 to 10% per annum. While this number might look small in the beginning, when you start calculating, you will quickly realize that you will end up spending a higher amount than what you planned for. 

On the other hand, if you take out a loan from a personal loan lender like MoneyView, the interest rate on your loan amount will be the lowest in the market at 1.33%. 

Why Should You Buy a Two-Wheeler on a Personal Loan?

Now that you know of the various features of a personal loan, mentioned below are the top 8 reasons why you should purchase a two-wheeler on a personal loan. 

Complete On Road Price

No matter which two-wheeler finance company you choose, in most cases, you will get up to a maximum of 90 to 95% on-road price and not the full amount. This essentially means that even after you avail of finance, you will need to pay some amount from your pocket to finance your vehicle.

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On the other hand, if you take out a personal loan, you will be able to finance the full on-road price of your vehicle and don’t need to spend even a single rupee from your pocket. 

No Need for a Downpayment

In lieu of the earlier point, when you take vehicle finance, in most cases you will need to make a down payment, which will be in the ballpark of 10 to 20%. On the other hand, when you take out a personal loan to finance your two-wheeler, you will not be spending any amount of money from your pocket for your down payment, as you will essentially purchase the vehicle at the complete price without any dues. 

Low Credit Score Is Embraced

Chances are that you are planning to buy your first vehicle right after you get into college or land your first job. At such a young age, you would probably not have a decent credit score given that you have not taken out any form of credit previously or have not applied for a credit card. But if you approach a vehicle financer, they will most certainly ask you for your credit score, and on witnessing that you don’t have a proper one, they will reject your application. 

On the other hand, if you approach a lender like Credy, which accepts applicants with low credit scores, you can get your loan amount without much hassle from your end. All you need to do is fulfill some of their criteria, such as employment history, employment status, etc., and you will be on your way to securing your loan amount. 

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No Need for Hypothecation 

Not a lot of bike aspirants know this, but if you take out a two-wheeler loan for purchasing a new vehicle, your vehicle will be hypothecated meaning, there will be a record of your loan with the RTO. Until and unless you pay off the full loan amount of your vehicle, your hypothecation will not end, and once you complete the full payment, you will need to undergo a lengthy process with the RTO to get your NOC or No-Objection Certificate. Without having the NOC from your local RTO, you will not be able to take the vehicle out of state; neither take it on international trips making it a significant constraint.

On the other hand, if you take out a personal loan and purchase your two-wheeler, you won’t need to undergo the hypothecation process, as you will essentially own the vehicle from the very first day itself, thus saving you money and time from the very first day of ownership. 

Conclusion Purchasing a two-wheeler on your personal loan is not only a good option, but I would go on to say that it is the best option. Taking out a personal loan will give you all the freedom you want, with essentially a no strings attached commitment. So go ahead, apply for a personal loan, and purchase your dream two-wheeler today.

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