When we talk about vehicle financing, we mostly think of car financing, as a car is a comparatively bigger purchase against vehicles like bikes or motorcycles. In fact, many banks have separate car financing services and club bike financing under asset financing. Even if it is a thing, it does not have major market recognition till date. For the bike finance market to mature; more and more people need to know about the financing options they have when they decide to buy a bike.
Some of the feature-rich bikes that we have in market today may cost as much as R10 000. A bike financing for this kind of an investment makes a lot of sense. When you have decided to get yourself a bike, why not get the best you can have.
How to go about bike financing?
Like any other type of financing, bike financing also has a checklist that you need to take heed of in order to be eligible for receiving financing options. First and foremost on this list is affordability. Are you financially disposable to make the purchase? You should measure the benefits provided by the bike against what you really need. This will help you to find out just the bike for you. Keeping the budget, for the bike, in mind will help you to zero down on one which fits the bill utility-wise and financially. This is the first step to any kind of financing you opt for; be it bike or car financing.
Once you have decided on the budget and the bike, you should find out what is the period for which you can have the financing option; that is, over how many years will the installments be spread. This along with the interest rate will give you an idea of the monthly EMI (Equated Monthly Installments) that you will pay once you have made the purchase. The more the number of years; lower the EMI amount, but a higher rate of interest as the principal is spread over many years. If you want to close the loan quickly, that can be done too by choosing lesser number of years and a higher EMI amount.
Credit score – A major factor in bike financing
Interest rate is the next and one of the most important components when it comes to financing. This component is directly linked to your credit score. If you have a positive credit score, you will get a fantastic interest rate, a little over the current prime of 9.25%. However, if you have previously defaulted on your financial commitments then your credit score will reflect that, causing the interest rate on the bike financing to go up.
The process of applying for bike financing is really easy. Many financing companies and bike dealers pre-approve the finance in a matter of minutes. Paperwork is necessary but not complicated. Financing companies will do their due diligence before offering you a financing option, and you can make sure you are getting the best deal by doing your due-diligence about the bike, the dealer, and the financing option that you choose.