The significance of owning a personal means of transport has increased drastically due to the post-pandemic social distancing measures. Not everyone can afford a car; hence the demand for two-wheelers has shot up. Lenders are offering an affordable range of two wheeler loans to cater to this demand.
Once you have picked a two-wheeled ride, decided the loan amount and the lender, the next step is to determine the tenure. The two wheeler loan tenure has a significant effect on the total amount you repay to the lender. A higher term means more interest. Thus, you should keep the following aspects in mind when deciding the tenure.
What is the importance of tenure?
The loan tenure is arguably the most critical aspect of the loan. Combined with the interest rate, it can determine your total amount specified for the loan repayment. A smartly chosen tenure can make the EMI payment very convenient for the borrower. In contrast, a term selected without consideration can result in a heavy expenditure in the form of interest rates.
Rate of interest
Usually, bike finance tenure ranges from one to five years in India. The bike loan interest rates significantly determine how much additional sum you are repaying to the financial institution on top of the principal. Although bike finance has a fixed interest rate and your EMI remains fixed throughout the tenure, it can still affect your wallet in the long run.
Suppose you take a loan for Rs. 1 lakh at an interest rate of 10% per annum. If you pick a one-year tenure to repay the loan, your EMIs will be significantly high, but the total amount you repay in a year will contain very little interest over the principal. It implies that you won’t have to pay a huge amount as interest. But if you go for a longer tenure, say five years, your EMIs will be cheap and affordable, but you will end up shelling out an excessive amount on the interest.
How to decide the tenure?
When deciding the two wheeler loan tenure, it is best to use a bike loan EMI calculator to calculate the EMIs payable for different tenures. If you can afford to pay a higher EMI for a shorter period and close the loan quickly, then go for a short term. However, if you are experiencing a dip in income and would like to stay on the safer side by paying affordable EMIs, choose the longer term.
After taking the interest rate, EMI and tenure into consideration, it is time to commit to your decision and bring home the bike of your dreams. You can avail of competitive bike loan interest rates on bike finance that cover up to 100% of the vehicle’s cost. Besides, you can easily calculate your EMIs and manage future expenses with EMI calculators.
Nowadays, you can even choose a loan tenure of up to five years at reputed financial institutions and enjoy the benefits of zero down payment on bike finance.