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Two wheeler loan and their benefits all you need to know

The growth rate of two wheelers in India for the last five years has been in the range of 3% to 8%, according to a report by economic times India. Industry players have predicted that the growth rate will be in the high single digits for the first quarter of 2017. Factors like declining fuel prices and interest rates are driving up demand in this sector.

A rise in demand for two wheelers is linked with the loans for two wheelers. The demand for two wheeler loan is also expected to receive a boost as the demand for two wheelers picks up. A 2 wheeler loan can either stand as an unsecured or secured loan. A secured loan requires you to pledge a collateral and generally has a lower interest rate. Whereas an unsecured loan requires you to make a down payment of 10%-15% of the value compared to a collateral. The rate of interest in case of an unsecured loan is naturally higher.

Where can you get a two wheeler loan?

Two wheeler loans are provided by banks as well non-banking financial companies (NBFCs). The interest rate offered by banks are slightly lower than the NBFCs. You should make an informed choice before taking a loan. The showroom from where you are purchasing the vehicle may also connect you with financial institutions that offer two wheeler loans.

Features of such loans–

1. An identity and residence proof is required before procuring a two wheeler loan.
2. You may be required to furnish your salary slips, bank statements and income tax returns.
3. A documentation charge up to 2% of the loan amount is usually levied.
4. A loan processing charge of 1%-2% of the loan amount is charged.
5. You will be asked to make a down payment of 10%-25% of the vehicle cost.
6. Depending on the loan tenure, the interest rates can vary from 10% to 11%.

The benefits of a two wheeler loan –

1. Two wheeler loans are now available online where the process is easier and quicker.
2. Some companies offer a discount of 0.5% on the interest rate.
3. A large number of non-banking financial companies offer two wheeler loans. In some cases, a low credit score may act as a deterrent for getting a loan from banks where the NBFCs can step as a better option.
4. The loan sanctioning process usually takes less than 2-3 days.

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