Six Mistakes to Avoid While Taking a Two-Wheeler Loan in 2024

Posted on Monday, November 11th, 2024 | By IndusInd Bank

Summary: Taking out a two-wheeler loan presents a number of advantages. However, you must steer clear of the common mistakes borrowers usually make while applying for this loan such as not doing research before applying, not paying attention to the loan details, disregarding your credit score, choosing zero down-payment, applying with multiple lenders, and not having a solid repayment plan.

Two-wheelers, such as motorcycles and scooters, continue to play a critical role in India’s transportation ecosystem. According to recent figures, bike sales witnessed a growth of 19% with sales going up from 124,705 units in December 2022 to 148,049 units in December 2023. Likewise, scooter sales saw an increase of 34% with sales going from 76,766 units in December 2022 to 103,167 units in December 2023. While this unrivalled popularity can be attributed to various factors such as accessibility and affordability, it can scarcely be disputed that the future of two-wheelers in the country is assuredly bright.

Why Take Out a Two-Wheeler Loan?

If India’s expanding two-wheeler loan market – estimated to be valued at over USD $12 billion by 2025 – is anything to go by, most buyers will rely on credit for procuring their scooter or bike. This is unsurprising, given that taking out a two-wheeler loan offers a slew of benefits including an opportunity to improve your credit score, tax benefits, and minimal financial burden among others.

Common Mistakes to Avoid While Taking a Two-Wheeler Loan

While applying for a two-wheeler loanis simple enough, being mindful of all aspects related to the loan can prove enormously helpful in the short and long term. Read on to learn of 6 common mistakes to avoid when taking out a bike or scooter loan.

1. Not Conducting Research before Choosing a Lender

Many people make the mistake of grabbing the first loan offer that comes their way, or even going for financing options offered by two-wheeler dealers without conducting even basic research. It is important to thoroughly research various lenders and loan options to make an informed decision. Begin by looking into and comparing the repayment terms, interest rates, and fees offered by different loan providers.

2. Not Paying Attention to the Fine Print

While it may be common to overlook reading the fine print in the loan document, it isn’t the best practice. Taking the time to read through the loan agreement can help you spot any potential red flags. Furthermore, it is important to ask questions and clarify any doubts related to crucial loan aspects such as the down payment, prepayment penalty, and processing fees before signing the loan agreement.

3. Disregarding your Credit Score before Applying

It is not a good idea to apply for a two-wheeler loan when your credit score is low. A good credit score, on the other hand, can help you secure better loan terms and even a lower interest rate. Therefore, do make sure to check your credit score before applying for a loan and take steps to improve it if there is a need.

4. Opting for Zero-down Payment

A zero-down payment loan allows you to take your scooter or bike home without paying anything at the dealership. This may seem tempting in principle but can cost you more in the long run. Paying a down payment, however, reduces the total loan amount and interest charged, effectively reducing your financial burden over the loan tenure.

5. Applying with Several Lenders Simultaneously

Some borrowers make the mistake of applying with several lenders at the same time to increase their odds of obtaining a loan from one or another lender. On the contrary, applying at multiple banks may make you appear credit-hungry, leading to rejection of your loan application. Worst of all, applying for a number of loans within a short period increases the number of hard inquiries, lowering your credit score.

6. Not having a Solid Repayment Plan

Occasionally, borrowers act in haste and apply for a bike loan without having a proper repayment plan in place. This is certainly not advisable. Make sure to lay out at least a rough plan to repay your loan before taking out one. This could include setting a budget, prioritising EMI payments, and making extra payments whenever possible.

Get a Two-Wheeler Loan from IndusInd Bank

Owning your dream bike or scooter gets simpler with two-wheeler finance from IndusInd Bank. Securing a two-wheeler loan from IndusInd Bank presents the following benefits:

• Get the best, most competitive interest rates for two-wheeler loans across the country.
• Choose a suitable loan repayment tenure from wide-ranging options – 12-36 months for regular two-wheelers and up to 60 months for high-end bikes.
• Obtain up to 95% on-road finance on loan amounts starting from INR 15,000, and going up to as much as INR 25 lakhs.
• Enjoy a hassle-free loan journey marked by i) speedy loan processing time i.e. just 4 hours with convenient doorstep documentation ii) simple eligibility criteria and documentation iii) transparent and budget-friendly two-wheeler loan EMI plans with no hidden charges.

Are you ready to bring home your dream bike? Apply for a two-wheeler loan with IndusInd Bank today!

Disclaimer: The information provided in this article is generic and for informational purposes only. It is not a substitute for specific advice in your circumstances. Hence, you are advised to consult your financial advisor before making any financial decision. IndusInd Bank Limited (IBL) does not influence the views of the author in any way. IBL and the author shall not be responsible for any direct/indirect loss or liability incurred by the reader for making any financial decisions based on the contents and information.