Published on October 27th, 2020 | by Bibhuranjan


Bike Loan Down Payment- Things to Know

A down payment is the partial payment, made in the early stages of an expensive purchase of goods and services. This payment is often made in cash and only represents a percentage of the actual price of the purchase. It offers a certain level of assurance to the lender about the borrower’s ability to repay the loan on time.

As two wheelers are an important part of the Indian road traffic, lenders now provide two wheeler loans to help customers buy the bike or two wheeler of their dreams. If you are planning on taking a loan to aid your bike purchase then you must have some prior knowledge about bike loans and bike loan down payments.

Here’s what you should know about Bike Loan down payments:

How is the down payment for a bike loan calculated?

Down payment is basically the difference between the on-road price of the bike and the amount funded by the loan lender. Therefore, the minimum possible down payment that a borrower might have to pay would include the RTO (Road Tax Office) and insurance charges for the specific bike.

Some lenders offer Zero Down payment option on Auto Loans

Some leading financial institutions offer to finance up to 100% of the cost of your desired two wheeler which could go up to maximum Rs. 1.5 lakhs. Hence, it is possible to get a bike or two wheeler on loan at zero down payment. However, in this case the bike loan interest rates charged will be much higher by the lender. So choose wisely while opting for a lender and enquire about the services provided

Your CIBIL Score is important

Having a healthy credit score that is around 700 or above can help you calculate your EMI as well as the down payment for your big purchase. So check your CIBIL score by either contacting your lender or simply going online and using a credit score calculator.

Other factors that affect down payment

The cost of the bike is obviously the biggest factor in determining the amount of the down payment as well as your repayment capacity. The lender will need more assurance and hence down payment if they feel you are less reliable and cannot manage your expenses well.

High down payment= low interest rates

Another aspect of the down payment is that the higher the down payment, the lower will be the interest payments on the remainder of the loan. Also, the EMI will be lower if you pay a high down payment up front and thus, there will be less burden on you to repay the amount in the future.

Down payment may not be Refundable

Another possibility concerning the down payment is that it may not be refundable. So if by chance or in a special circumstance, the deal fails and the borrower wishes to get the down payment back, it is possible that the lender might not oblige.

Photo by Frederick Warren on Unsplash

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Editorial Officer, I'm an avid tech enthusiast at heart. I like to mug up on new and exciting developments on science and tech and have a deep love for PC gaming. Other hobbies include writing blog posts, music and DIY projects.

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