Personal commuting vehicles have become a necessity due to the current pandemic. Public transport can increase the risk of Corona virus transmission. A bike is thus the most cost-effective and safe personal commuting vehicle available in these scenarios.
Many of us have trouble arranging the necessary cash to purchase a bike though. So, a bike loan comes off as a handy financing tool for such purchases. However, a down payment is still required and the rest is then paid by the loan provider.
At the time of this pandemic, many have a crunched budget and for that reason many seek for a way where they do not have to make a down payment at all to own a bike. If you too are looking for a bike loan without down payment, then rest assured. You can buy a bike without having to make such a lump sum payment. Many reputed lenders offer 100% financing on bike loans. But, before that, let us first understand the concept of down payment for a better understanding.
What Is Down Payment on a Loan?
The moment a bike leaves the showroom, it begins depreciating. The bike’s market value is usually down by between 10% and 15% as it leaves the showroom. Loan providers have a margin so that they don’t run the risk of losing their profits through such depreciations. The margin is the difference between bike cost and the loan amount.
Consider that the bike’s cost is Rs.50,000 and the loan amount is Rs.45,000. The down-payment is Rs.55,000 that the bike owner must pay. If the bike owner fails monthly to make instalments, the loan issuer has the right to sell the bike and recover the loan amount. A down payment of Rs.5,000 is thus a security cushion in case the bike does not sell at the agreed price.
Advantages of Getting a Bike Loan Without Down Payment:
- The borrower does not need to arrange funds immediately for buying a bike: As very little money is accessible to people for lump sum payments, bike loans without down payment can be the right answer for two-wheeler purchase. This saves the borrower from having to arrange for funds to cover the down payment.
- The borrower’s liquidity does not suffer:The down payments are usually paid out of savings. The borrower can choose to get a 100% financing bike loan, which ensures there is no additional strain on the borrower’s savings.
- Failure to pay monthly instalments will not result in the borrower losing their down payment amount:A standard loan with down payment has the possibility that the borrower could lose the down payment amount in case of repayment default and bike auction. A 100% financed loan will result in the borrower losing the minimum amount due to no upfront money being paid.
Charges and Other Tariffs Applicable on 100% Finance on a Bike Loan:
- There are different loan processing fees for each state: Loan processing charges can vary depending on the state. The maximum charge is 3% on the loan amount. The loan processing charge is an additional charge for processing documents.
- Documentation fees can vary from one state to another: Every state has different documentation requirements. Maximum charge is 3% of the loan amount. These charges are for the preparation and filling of several papers.
- Interest charge on the loan amount: Lenders may charge the borrower a fixed or floating interest rate on the loan amount.
- Foreclosing costs: Lenders impose foreclosing fees on the borrower in case the facility is availed. This penalty is imposed if the borrower wishes to repay the loan prior to the maturity date.
Eligibility Criteria to Get a Bike Loan without Down Payment:
Make sure that you meet the following standard requirements before applying for a bike loan without down payment to receive easy approval.
- The applicant must be at least 21 years old.
- The applicant must provide a suitable proof of income.
- Salaried individuals can produce their salary slips and self-employed or businessperson can show their audited financial documents.
- A minimum income of Rs.25,000 is a must for salaried individuals.
- A self-employed applicant must be in the same business for 2 years, whereby any continuity error may result in the rejection of loan application.
Following this, the applicant can apply with the selected lender to get a bike loan without down payment. This is a wonderful feature because anyone who needs a bike quickly and doesn’t have the cash to make down payment can apply for it. It is easy to apply for a 100% financed loan and any reputable lender will provide all details about the 100% financed loan.