The retail prices of commodities in India have been hiked by several folds in recent years. The same trend has been witnessed in the automobile sector, especially motorcycles.
This is one of the reasons why Indians now apply for two-wheeler loans when they want to buy a bike.
However, borrowers need to follow certain tips when they want to apply for a motorcycle loan. This simple step can help a borrower enjoy low bike loan interest rates.
This post, in the following sections, aims to shine a light on some of those tips.
Here goes –
The loan amount should be carefully selected
It is understandable for one to feel tempted to buy an expensive bike. But one must never buy the bike one wants by solely relying on their lender.
Here is the enunciation.
If one wants to buy an expensive bike, then they must make sure that they are making a huge down payment. When the borrowed amount is nominal, the lender will automatically set a low interest rate on the borrowed sum.
It is as simple as that!
The same goes for the tenure of the loan
Tenure is the time one chooses to repay the borrowed sum to their lender. If the tenure for the bike loan is long, the interest rate will be high. On the flip side, when the tenure for a bike loan is short, the scheme entails a low interest rate.
Applicants should only apply for a bike loan when they have high credit scores
Lenders prefer borrowers with immaculate credit scores. In the eyes of a lender, a borrower with a high credit score is a ‘low-risk’ case. On the other hand, a borrower with a low credit score is a ‘high-risk’ case. As lenders want to recover the money they have lent to a borrower, they would always prefer a low-risk client.
This is the reason why borrowers with poor credit scores end up paying high interest rates for a bike loan. To keep this from happening, borrowers should first boost their credit score and then apply for a bike loan.
To learn more about how one can boost their credit score, please consult with a financial advisor.
Interest rates for a bike loan depend on the annual or monthly income of the borrower
Borrowers who earn a considerable amount of money monthly or annually would enjoy low interest rates from lenders. Hence, borrowers should present their bank statements to the lender while applying for a loan.
Interest rates also depend on the type of employment the borrower has
Lenders prefer borrowers who have been under the payroll of an enterprise for more than 5 years. Similarly, borrowers who have been running a stable business for more than 5 years are preferred by lenders. In simple words, to enjoy low motorcycle loan interest rates, one has to have a stable source of income.
Interest rates also depend on the debt-to-income ratio of the borrower
It is always a good idea for a borrower to check their debt-to-income ratio.
What is the meaning of a debt-to-income ratio?
Well, the ratio that indicates how much of a borrower’s current income is being used to repay all the debt they have incurred. According to experts, a low debt-to-income ratio leads to low interest rates.
Apply for lowest interest – Bike Loan
Negotiating with the lender can also help
It is the oldest trick in the proverbial book. Negotiations or in simple words, bargaining with a service provider can allow a customer to get a better deal.
Suppose the current income of a borrower is not sufficient enough to incur a low interest rate. But the borrower is expecting a raise in salary or monthly turnover of their business. The borrower can always try to convince the lender to reduce the interest rate by producing relevant proof backing up their claim.
For more expert tips, the reader is requested to consult a professional financial advisor.