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The demand for two-wheelers in India has witnessed exponential growth over the last two decades. Be it the agility of a bike or simply the ease and convenience that comes with it, two-wheelers remain fan-favourites across the country.
While once buying a two-wheeler on EMI meant making a hefty down payment, this aspect has undergone significant change today with the inception of zero down payment bike loans. To help make things more transparent, here’s a guide that explains the minimum down payment requirements of a bike loan.
Minimum Down Payment Needed for a Two-Wheeler Loan
Most lenders finance two-wheeler loans against a nominal down payment of 10%-30%. This means you will have to deposit an initial lump-sum amount to avail of the loan that will cover the rest of the bike’s cost. This loan amount needs to be repaid in EMIs over the selected repayment tenure. Most lenders also have a two-wheeler EMI calculator that lets you estimate EMI burdens before applying. However, this minimum deposit clause will vary depending on the lender you pick and your credit profile. You can also opt for a zero down payment bike loan and side-step this clause altogether.
Zero Down Payment Bike Loan
Since bike finance options have become equally popular tools for funding bike purchases, lenders are constantly looking for ways to make such options more attractive and pocket-friendly. Thus, some lenders have now introduced zero down payment bike loans, wherein you are exempted from the need to deposit a lump-sum amount for the bike. Instead, the loan sanctioned by the lender covers the vehicle’s on-road price.
Benefits of Zero Down Payment Bike Loan
If you still haven’t figured out how a zero down payment bike loan can help, here’s a list of benefits you can review.
- With a zero down payment loan, you don’t have to arrange the funds needed for the initial deposit.
- Your liquid cash flow can remain unhampered.
- You won’t have to dip into your savings reserve or withdraw from an FD to fund the deposit amount.
- You won’t have to wait to save enough to meet the margin requirements.
- You can return the borrowed sum in simple monthly installments over a flexible tenure.
However, there are a few caveats with zero down payment bike loans. Firstly, they might only cover specific bike models; secondly, you still have to pay the applicable loan processing charges for such loans. It is also important to note that opting for a zero down payment bike loan affects your EMI payments and loan tenure.
How Does a Zero Down Payment Bike Loan Affect EMIs?
Your EMI burden depends on the borrowed loan amount. If you put down a deposit for the loan, only the remaining amount needs to be repaid through EMIs. However, for a zero down payment bike loan, the borrowed amount is equivalent to the cost of the bike. In other words, your monthly installments tend to be high since the amount borrowed is more.
Depending on your repayment capabilities, you can opt for a long tenure or continue shouldering high EMIs monthly. A two-wheeler EMI calculator can come in handy in such cases. You can use the two-wheeler EMI calculator to determine the right repayment tenure and loan amount.
When is a Zero Down Payment Bike Loan Best?
A zero down payment bike loan is the best solution for those dealing with a cash crunch. Depositing a down payment may be challenging for those who need Cash liquidity or have existing expenses. Thus, if you cannot meet the margin requirements for a loan, a zero down payment loan might be your saving grace. You can also use a two-wheeler EMI calculator to check your EMI expenses and plan your finances better preemptively.
Zero Down Payment Bike Loan Eligibility Checklist
The following eligibility checklist can help you check whether you qualify for such a loan. As per the said checklist, an applicant:
- Should be an Indian citizen
- Should be in the age group of 21-65 years.
- Should be a salaried employee for at least a year.
- Should be a self-employed individual with a business history of at least two years.
- Should have a monthly income of at least ₹12,000.
- Should have a good credit score of preferably 750 or higher.
Ways to Avail of Low Down Payment Benefits
Even if you don’t want to opt for a zero down payment plan, here are some tips you can implement to keep your bike loan down payment low.
1. Maintain a Healthy Credit Score – A healthy credit score positions you as a reliable borrower. This automatically qualifies you for better loan terms, including lower bike loan interest rates and down payment benefits. In other words, if you have a CIBIL score of 750 or above, lenders would be more willing to sanction higher loan amounts at lower rates.
2. Approach Your Current Lender – If you have an existing relationship with a lender, it would be prudent to approach them before you start looking for financing options elsewhere. Your existing lender might offer special interest rates, no documentation benefits or processing fee waivers. Thus, you should check if you qualify for any such pre-approved offers.
3. Pick an Affordable Bike – Since the down payment amount is calculated as a proportion of the two-wheeler’s cost, the due amount will be affected by the bike’s price. In other words, for a cost-effective commuter, the down payment amount might be lower than the down payment needed for a premium sports bike.
Summing It Up
While minimum down payment requirements vary from one lender to another, some lenders like Bajaj Markets can finance up to 100% of your bike’s on-road price. Open to both salaried and self-employed persons, a zero down payment bike loan from Bajaj Markets comes with an easy application process and a simple document list. Such zero down payment bike loans can be a boon for people pushing their two-wheeler dreams simply due to the lack of immediate funds.
