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Two Wheeler Finance India
The two wheeler segment of Indian automobile industry has been witness to an impressive growth in recent times. While the entire automobile piece is on an upswing, the two wheeler segment is really the one stealing the show. And one major factor contributing to this exciting expansion has been the new found fondness of banks and financial institutions in India offering a substantial credit and financing option to the buyers, both for the new as well as the used two wheelers. The financiers to the two wheelers in India has ensured that buying a dream two wheeler does not remain a dream anymore for most of
the Indian buyers, irrespective of their financial status. However, before opting for a two wheeler financing option, a customer should be careful of the following factors:
- A financing option for a two wheeler in many cases entail hidden costs in the garb of service, processing, documentation charges or even value added tax.
- A good number of financiers levy fixed prepayment charges to the tune of 4-5% of the outstanding loan amount that increases the loan burden dramatically.
- Equated Monthly Installment (EMIs) usually does have two components, an interest repayment and a principal repayment. The amount paid towards principal and interest varies each month accordingly and it is important to keep a tab on this, especially those interested in prepayment of loans.
- Terms mentioned in the financing agreement including those relating to insurance claim money, amortization schedule, usage of vehicle, default and others should be thoroughly analyzed.
- The amount of loan usually offered range INR 50,000 to INR 1, 50,000. In case of new two wheelers, the loan offered is 90 per cent cost of the vehicle. The duration of the payment ranges from six months to three years.
- The documents required in case of availing a loan for the two wheeler are properly filled-in application form, photographs, proof of residence and proof of income for the past two years and other relevant papers, as and where needed.
Among the leading financiers for the two wheelers in India, the popular names are the State Bank of India, Countrywide, HDFC Bank, Citibank, Tata Finance and Sundaram Finance. While rates of interest vary, the terms and conditions too might differ from one customer to another depending upon the creditworthiness as determined by the respective financier. Quite a few of them even offer the facility of online application and approval of loans that is fast, secure and available throughout the year.
In the context of two wheeler financing in India, one can have it through one of the options namely, loan, hire purchase and lease. Lease further could either be a financial or operating lease and should be opted for carefully due to their different implications for tax benefits, ownership title, depreciation and the like. Also, the financiers do offer a range of payment schemes to the customers such as Down Payment Scheme, Structured Payment Scheme, Advance Installments Scheme, Security Deposit Scheme and Residual Value Scheme.