How to Buy a Bike on EMI?

Two-wheelers are ideal for navigating the often congested Indian roads. Both in rural and urban areas, individuals prefer owning two-wheelers for their daily commutes over four-wheelers. These vehicles are easy to handle, offer better manoeuvrability and are fuel-efficient. 

 

Additionally, you won’t have to rely on public transport to reach your destination. Over the last decade, there has been a substantial increase in the number of registered two-wheelers in the country. Individuals today can easily purchase bikes by applying for – and gaining access to – two-wheeler loans. 

 

So, if you're considering purchasing a bike, scooter, or superbike on EMI, this guide can help you. Here’s everything you need to know, including what an EMI is, how to buy a bike on EMI, its benefits, eligibility criteria, and the required documents.

Equated Monthly Instalment (EMI) is a fixed monthly payment made by a borrower to repay a loan over a predetermined period. The loan amount, interest rate, and repayment tenure determine the monthly instalment amount.

 

Here’s how it works:

• Loan Amount (Principal): This is the total amount borrowed to purchase the bike. The lender disburses this amount after approval. This amount is based on the loan-to-value (LTV) ratio, which is the percent of your bike’s market value which is being financed by the lender. The remaining amount must be paid as an upfront cost in the form of a down payment, For example, if the bike costs ₹1 Lakh and the LTV is set at 80%, then you need to pay ₹20,000 as an upfront payment. You will receive the remaining ₹80,000 as a loan.

• Interest Rate: The lender charges an interest rate on the loan, which is added to the principal amount over the tenure. This rate can be fixed or floating, depending on the loan provider’s policies.

• Repayment Tenure: This is the duration over which you agree to repay the bike loan, usually ranges up to 60 months. A longer tenure reduces the EMI amount but increases the total interest payable.

• EMI Calculation: The EMI amount is calculated using a standard formula:

 

EMI = [P x R x (1+R)^N] / [(1+R)^N-1]

• P is the principal loan amount

• R is the monthly rate of interest

• N is the number of monthly instalments

• Payment Process: Once the loan is approved, the EMI amount is automatically debited from your bank account each month until the loan is fully repaid

 

By choosing to buy a bike on EMI, you can enjoy the convenience of splitting the cost into affordable monthly payments. Always use a bike loan EMI calculator to plan your finances and select a tenure and EMI that suit your budget.

If you wish to buy a scooter or new bike on EMI, follow the steps mentioned below:

Choose Your Bike

First and foremost, select a bike that suits your needs and preferences. Start by assessing your needs—whether it’s for daily commuting, long rides, or adventure. Set a clear budget to avoid overspending. Research and compare models based on specifications, features, and prices, and read reviews to ensure reliability.

 

Consider the bike’s resale value and take a test ride to evaluate its comfort and performance. Check the bike’s price, maintenance costs, insurance, and other expenses. Finally, confirm availability and check for ongoing offers at dealerships to make the best choice within your budget.

Check Eligibility for Buying Bikes in Instalments

Ensure that you are eligible to apply for the two-wheeler loan. Different lenders have varying eligibility criteria. By visiting their websites, you can go through the terms and conditions and ascertain the eligibility terms, such as minimum age, minimum monthly income and documents needed to apply for the loan. This also significantly reduces the chances of your loan application getting rejected.

Compare Loan Offers

Comparing loan offers is crucial when financing a bike on EMI. Start by researching lenders and their loan terms, including interest rates, processing fees, and repayment tenures. Use online tools to compare offers from multiple lenders, ensuring you get the lowest interest rate and flexible repayment options. 

 

Check for hidden charges or penalties for early repayment to avoid unexpected costs. By comparing loan offers, you can choose the most affordable and convenient option that aligns with your financial situation.

Calculate Bike Loan EMI Using The Bike Loan EMI Calculator

Next, you can calculate the EMI amount you might have to pay once the lender approves your loan application. It is prudent to anticipate the EMI amount, which will help you streamline your finances. You can do this by using a bike loan EMI calculator and by entering the interest rate, principal amount and loan tenure. 

 

By calculating the EMI amount, you will be in a better position to gauge the two-wheeler loan amount you require and the ideal repayment period. This ensures that you wouldn’t be overburdened while repaying the loan.

Apply for a Two-wheeler Loan

Now, you need to apply for a two wheeler loan and buy the bike on EMI. You can either apply for the loan online or visit the nearest NBFC or bank branch office. Once you provide the basic details online – such as your personal and employment details, your loan application will be assessed by the lender. If your loan application is approved, a representative from the lending entity will get in touch with you to finalise the details.

Make The Down Payment

Making a down payment reduces the loan amount, helping lower your EMIs and overall interest charges. Assess your finances to decide a reasonable amount you can pay upfront without straining your budget. 

 

Ensure the payment is made through a secure method and collect a receipt for proof of transaction. A higher down payment can ease your repayment journey and make your loan more manageable in the long run.

EMI Repayment

EMI repayment is the final step in your bike loan journey and requires consistent financial discipline. Ensure that your monthly instalments are paid on time to avoid penalties and maintain a good credit score. 

 

Setting up auto-debit for your EMIs can help streamline the repayment process and ensure you never miss a payment. Properly managing your EMI repayments not only helps you clear the loan comfortably but also improves your eligibility for future loans.

Different lenders have varying eligibility criteria while assessing loan applications. However, the most common eligibility criteria include the following.

Here are the essential documents required for a bike purchase on EMI: