What are different payment plans for two-wheeler loans in India
The loans act as a gateway to meet all the financial emergencies or convert your dreams to reality. With every loan, there are different payment plans. Given that two-wheelers are one of the most common transportation modes in India, knowing the bike loan repayment options is important.
Let us have a quick look at these repayment options:
Making only interest payments monthly
Under this repayment plan of two-wheeler loans, only the interest is to be paid out monthly basis. All the principal amount is repaid only on maturity of a loan. This type of repayment option is suitable for those who lack adequate regular cash flow or income to service both the interest and principal component of the loan during tenure.
Upfront interest payment
This option involves payment of the interest component upfront at the time of loan sanctioning, and the principal component is repaid at the end of the loan tenure. This repayment option suits well those borrowers who can make the upfront interest payment but are willing to opt for a non-EMI route to pay principal at the end of tenure.
How to choose the right bike loan EMI that matches well with the prepayment plan
Along with choosing the right repayment plan, deciding suitable EMI is vital for avoiding the situation of defaulting monthly loan EMIs. Here are the key things to keep in mind while selecting bike loan EMIs:
How soon you need to finish the loan: If you wish to finish the loan repayments at the earliest, always go with the short tenure. However, keep in mind that a short tenure implies higher EMI outgo every month, which might put pressure on your finances.
Analyse your EMI affordability taking into consideration monthly expenses: When you choose a tenure, calculate well your EMI outgo. If you are comfortable with a small EMI, choose longer tenure. And to reduce your overall interest payments after choosing a long tenure, try to prepay the loan when you have surplus funds idle in your bank.
Interest rates applicable on loans- As interest rates widely vary from lender to lender and as per the customer's credit profile, it's important to opt for the lender with the lowest interest rate. Apart from the interest rate, other factors that decide the parameters are processing fee, amount, tenure, etc. Finalize the lender whose deal fits best as per your financial requirement and repayment capacity.
