With the fast pace of life, a Two Wheeler is a necessity and not a luxury for everyone. Traveling to work, going shopping for groceries, or riding for pleasure, scooters and motorbikes are convenient, effective, and cost-effective. But not everyone can pay for a Two Wheeler cash down, and hence Two Wheeler loans are so trendy. With financing, one is able to pay for the desired Two Wheeler without the hassles of shouldering the total front-end sum. But first before one plunges into borrowing, there is a very important thing that needs consideration and that is the two wheeler rate of interest and how one needs to calculate it in a correct manner.
A two wheeler loan calculator can be a very useful tool in coming to the cost implication of purchasing a Two Wheeler on loan. What this article attempts to do is analyze the important points in the context of Two Wheeler interest rates, using a loan calculator, and using these to make the most logical decision.
Learning About Two Wheeler Loans and Interest Rates
A two wheeler loan calculator is a loan which allows two wheelers or scooters to be purchased through the virtue of financing of a financier like a bank, NBFC, or other financiers. The sum financed by the financier should be repaid in a period in the form of installments with a rate of interest. Rate of interest charged on the loan is one of the strongest factors that can be the decisive factor while determining the loan cost.
What is a Two Wheeler Rate of Interest?
Two wheeler rate of interest is the rate at which money lender is charging the interest to the borrower for the borrowing of the money against the value of the loan (price of bike). The interest is being charged on the total loan amount and the borrower re-pay it in equal monthly installments over the loan tenure.
Factors Affecting Two Wheeler Interest Rates
There are a number of elements that influence the Two Wheeler interest rates that may be offered by lenders. They are:
Credit Score: Lenders utilize your credit score to check your credit-worthiness. The better the credit score, the better client you are with less risk for the lender, and they will be happy to provide you with a low rate of interest. Low credit scores will force them to provide a higher rate or refuse the loan.
Loan Amount and Tenure: The interest you need to pay can be calculated based on the loan amount and its tenure. Greater tenures and amounts generally lead to a greater interest rate. Shorter tenures receive lower interest rates since they involve less risk for the lender.
Down Payment: The high down payment will decrease the loan outstanding balance, thus decreasing the lender’s risk. Lenders will be able to provide low interest rates to the high down payment clients.
Lender’s Policies: Different lenders have different policies on how interest rates should be calculated.
Economic Conditions: Overall general economic conditions also influence interest rates. Base interest rates, for instance, are set by central banks, and trends in central bank rates can have the effect of directly influencing lenders’ interest rates on Two Wheeler loans.
Nature of Two Wheeler: Nature of Two Wheeler purchased also comes into play when determining the interest rate. Those bikes that are luxurious or top-end might receive a high rate of interest because the loan size is massive.
The Role Played by a Two Wheeler Loan Calculator
A Two Wheeler loan calculator is a web-based calculator that assists you in determining the monthly installment which you need to pay for a Two Wheeler loan. By putting some inputs like the loan amount, interest rate, and loan tenure, you can easily calculate your EMI (Equated Monthly Installment) and thus manage your finances better.
How to use a Two Wheeler Loan Calculator?
The Two Wheeler loan calculator is simple to use also. You just need to enter the following fundamental details:
Loan Amount: It is the cost which you avail from the financier. It usually is cost of Two Wheeler without down payment.
Interest Rate: The rate of interest is the rate at which the lender is going to charge. You will have to put the rate by the calculator, and this could be fixed or floating.
Loan Term: It is the time for which you will be paying the loan back. Two Wheeler loans can be 1 to 6 years term. The short-term can pay more instalment per month but less interest on the loan during its tenure, whereas the long terms will pay less instalment per month but more interest on the loan during its tenure.
The instant you enter these values into the calculator, it will use a general formula to calculate how much EMI you will pay each month.
Advantages of a Two Wheeler Loan Calculator
Accurate Financial Planning: Using a two wheeler loan calculator, you can determine how much you really need to pay each month. You would be able to plan efficiently regarding your finance and be sure you are in a position to clear the installments without draining your budget.
Comparison of Different Loan Offers: You can compare different loan offers with different tenures, interest rates, and loan amounts through a loan calculator and see how it affects your EMI. It might help you choose the most suitable and lowest-cost loan offer.
Transparency: Transparency of where the loan will be calculated is done by a Two Wheeler loan calculator. It lets you know immediately what amount of interest you will be required to pay and what proportion of your EMI will go towards principal.
Helps in Making an Informed Decision: Even though you can try out amounts such as the loan and duration, your calculator will assist you in making an informed decision to make a larger down payment, to select a shorter duration, or select a different bank with the maximum interest rate.
Saves Time: Instead of sitting down at the feet of a bank executive and having them walk you through loan scenarios, you can just use a loan calculator and get a very good idea of how your loan repayment is going to work. This saves time and puts you in a better position when you make decisions.
How to Choose the Best Two Wheeler Loan for You
Selecting the proper loan for your Two Wheeler Loan is no biggie with so many aspects to consider like interest rate and result of the loan calculator. You can make your best available loan choice based on the following steps:
Compare Lenders: Don’t select the first lender you find. Lenders have varying interest rates, repayment period, and processing fees. Compare various offers of loans with the assistance of a loan calculator.
Check Your Credit Score: Verify your credit score prior to applying for a loan. Having a good credit score will award you low interest rates and therefore save your money in the future.
Select a Loan Tenor That Fits Your Pocket: The longer tenor will cost you less every month but more in overall interest paid. Select a balance that fits your pocket and repayment ability.
Read the Fine Print: Make sure you really understand all of the terms and conditions of the loan such as processing charges, late payment charges, and other charges which are not quite so obvious.
Two Wheelers are a necessity in the present era, and they are also convenient as well as cost-effective. Taking finance for Two Wheeler on loan is an acceptable means of handling the expenses, but knowing the effect of two wheeler rates of interest results in intelligent decisions. A two wheeler loan calculator is a simple and hassle-free method which can provide you with approximate monthly payments, comparison of loans, and how to prepare for the same. Using these services and keeping these aspects in mind, you can get the best loan for yourself without disturbing your finances.
