The financial world has witnessed numerous shifts. From trends arising from changing market sentiments that skew up the stock market charts to revolutionary loan apps embellishing the phones of users in every corner of the world, time has been a spectator. Amidst these, a new form of financial revolution has set its foot in India – Bike Loans.
Similar to car loans, bike loans are designed to fulfil the desires of individuals who want to own a vehicle of their own but don’t want to spend a lot at once. Bike loans make access to a bike instant and convenient, allowing individuals to span miles through narrow lanes in their own time with comfort. However, this elevated convenience of accessing a bike loan doesn’t translate into getting into the loan process without practising financial caution. Below are a few types of charges that should be taken into consideration when taking a bike loan.
1. Interest rate:
When borrowing any form of loan, the interest rate is the first thing that captures the attention of the borrower. The same goes for a two-wheeler loan. Even the slightest difference in the interest rate can significantly impact the overall loan amount. Thus, it is vital to carefully consider the interest rate on the loan being borrowed. It is always a good idea to spend enough time comparing the interest rates between different lenders. This process is now simplified through the emergence of loan apps. If a borrower browses past a bike loan online, they can easily sift through the loan list and go ahead with an option that offers the lowest interest.
2. Processing fees:
Bike loans usually come with non-refundable processing fees. If someone is buying a bike online on loan, they should always be aware that processing fees may be lurking in the background. Although it’s a one-time payment that is supposed to be done at the beginning of the loan process, it can significantly impact the overall loan amount. An individual should make adjustments to their payment plan accordingly. It’s important to remember that processing fees may not be adjusted in future payments. Thus, the borrower is required to have the prepayment fees with them at the time of availing of the loan.
3. Pre-closure charges:
Imagine a time when a borrower manages to pay off their loan with interest before the predetermined loan tenure. A significant achievement that must make everyone happy, right? Not really! Some lenders may ask for a prepayment penalty or pre-closure fees. Therefore, a borrower should understand the terms of the loan and any hidden or future charges associated with it. It’s always better to go ahead with a lender that charges no prepayment fees. In case all loan options presented to the borrower come with a prepayment penalty, the borrower should choose the one that has the lowest prepayment fees.
In some cases, a borrower may be eligible for a tax exemption when they take a bike loan. It’s always a good idea to consult a financial advisor to discuss the tax component of loans and how it may benefit the borrower.
To conclude, buying a bike can be a significant achievement, but when bought on a loan, it’s essential to practice caution, compare options and be well acquainted with the different types of charges that come along with the loan.