Should I finance a motorcycle? This will be the first question that will come into your mind once you have finalized the perfect bike for yourself.

And in this article, I am going to answer this question for you. Not only this but I will tell you about almost everything that you need to know about motorcycle financing or two-wheeler loans.

So without any further ado, let’s get started!

Should I Finance A Motorcycle?

Yes, you should definitely finance your motorcycle because it comes with a lot of benefits. And if planned well then you might also not have to pay any interest.

There was a time when people never used to think about getting a two-wheeler loan. They just used to buy them by paying cash upfront.

But the scenario has changed drastically today. Mainly because of the ever-increasing prices of motorcycles. Earlier you could buy good bikes for under 1 lakh, then after some time bikes under 1.3 lakhs were considered good. Nowadays you can get the best bikes under 3 lakhs, or there are some bikes under 2 lakhs as well.

Even if you want a 150cc commuter bike then you will have to look for bikes under 1.5 lakhs these days.

Bike prices have more than doubled in recent years. And this has given a steep rise to two-wheeler loans.

But the question that every buyer asks himself is: Should I finance a motorcycle?

And if you are also planning to buy your dream bike then this question must be bothering you as well.

I know it can be a really hard decision to take. Because all the people that you might have asked so far must have given you mixed answers. And that’s okay because everyone has their opinions about motorcycle financing. Some prefer paying the cash upfront and some like to take a two wheeler loan.

But I think you should definitely finance your next motorcycle without any doubt. And I have plenty of good reasons to support my answer.

Just keep reading to know about them.

Is It Better To Finance Or Pay Cash For A Motorcycle?

Now, let me tell you why I am saying that financing a motorcycle is a good choice.

Let’s talk about the pros and cons of financing a motorcycle and buying it in cash. I am sure after reading this, you will have a definite answer.

1) Choice Of Bikes

The biggest benefit of financing a motorcycle is that it increases the number of choices for you.

If you have a certain amount of cash then you will be limited to a certain amount of motorcycle choices that you can purchase with that cash, right? You cannot increase your budget while buying a bike in cash.

However, if you are financing your bike then you can go for higher cc or bigger bikes if you have good credit ratings and can pay higher EMIs.

Therefore you can have more choices when buying a motorcycle.

2) Financial Relief

It may sound absurd but financing a motorcycle can actually provide you financial relief. Let me explain.

If you are a bike enthusiast then you will relate to me when I say: Buying a motorcycle on cash can empty your bank accounts.

It does not matter how much you have saved up over the years. When it comes to purchasing a motorcycle then you will want to spend it all.

And this is where the financial trauma begins. What if you face some sort of financial emergency after you buy the bike and need money to get out of it? Believe me, you never want to face this situation.

Therefore, it makes sense to buy the motorcycle by taking two wheeler loan even if you have the required cash.

How To Pay Zero Interest

If you are worried about the interest that you will have to pay then I have the solution for that as well.

The Interest rates on two-wheeler can be anywhere between 6.85% to 18%. Suppose you have a good credit rating and are making a decent down payment. In this case, you are most likely to get an interest rate of under 10%.

Now what you need to do is, finance your motorcycle and invest the remaining amount that you have in cash. There are enough financial instruments (like Mutual Funds) in the market that can easily give you a return of at least 15%. Just make sure that the instrument lets you withdraw the amount whenever you want.

Note: I am not a finance expert so you will have to do a little research about where to put your money.

So you will be paying an interest of 10% on the remaining amount to the bank. But you will be earning 15% (or higher) on the same amount from your investments.

Therefore in the end you will be earning 5% interest on that amount. And you also have the cash in hand, because you can withdraw the amount whenever needed.

This is how financing the bike can actually give you financial relief.

3) Lower Interest Rates

Earlier interest rates of two-wheeler loans were very high because very few people used to finance their bikes. However, today more and more people are opting for loans as the prices of motorcycles have increased a lot.

To cater to this increased demand for two wheeler loans many banks and financial institutions have started offering loans. As a result, they are providing lower interest rates to cut the competition off. We will discuss the best companies to finance a motorcycle in the later part of this article.

Therefore if you have a good credit score then you can get really low interest rates for financing a motorcycle. And as discussed, you can earn higher interest rates by investing your remaining money.

This is one of the reasons why you should finance your motorcycle and not buy it in cash.

4) Easy Process

The process for applying for a two wheeler has become very easy these days. Earlier people used to choose the cash option because financing a bike used to take a lot of time.

However, these days, you can finance a motorcycle in a single day. It’s like buying a motorcycle in cash.

5) Monthly EMIs

The only drawback of financing a motorcycle is that you have to take the burden of paying the monthly EMIs. Which you don’t have to deal with if you pay for your motorcycle in cash.

However, if you plan the purchase of your bike well, then the monthly EMIs will not bother you at all. We will discuss more about this in the later part of the article.

How Long Should I Finance A Motorcycle?

The thumb rule for deciding the term for financing a motorcycle is to keep it as short as possible.

The term for a two-wheeler loan can range from 1 year to 5 years. And it can vary from bank to bank. But the question that arises is how long should your motorcycle loan last.

The simple answer to this question is it should last for as less years as possible.

Now you will be like, is it in my hand to decide the term of financing? Well, yes, it is totally in your hand.

The higher the EMIs you will pay the lower the term of your two-wheeler loan will get. Ideally, the term for financing a motorcycle should not be more than 4 years.

Now the question that arises is how much amount in monthly EMI should you pay.

What Is A Good Monthly Payment For A Motorcycle?

Ideally, you should not pay more than 10% of your monthly salary in EMI for your motorcycle loan.

This is where most people make wrong decisions. Paying the bike loan as early as possible does not mean that you should pay your whole salary in the EMIs.

You have to maintain your lifestyle after purchasing the motorcycle, right? And needless to say, you will also face petrol and maintenance expenses related to your bike. These expenses you will have to bear from your monthly salary.

So if you don’t want to affect your monthly budget and want to maintain your current lifestyle then you should not pay more than 10% in EMI for your bike.

This will make sure that you keep enjoying your life and your bike without having financial issues.

Personal Loan Vs Two Wheeler Loan

As discussed, financing a motorcycle is a better option than buying it in cash. So now you must be wondering whether you should get a two-wheeler loan or should take a personal loan instead.

Well, the answer is very simple, whichever is offering the less rate of interest, you should go with that.

Having said that there are other things that you should also consider.

Ownership Of The Bike

If you take a two-wheeler loan then you are not considered as the owner of the bike until you pay off the loan. Banks or financial institutions from where you have financed your motorcycle will be the owner until the loan is finished.

On the other hand, if you take a personal loan then you will be the owner of your bike from day one.

So in this regard, a personal loan is better than financing a motorcycle. But only if it is offering less rate of interest.

Availability

Personal loans are generally pre-approved. And you will only get a less rate of interest if you have any pre-approved personal loan offer. Otherwise, interest rates of personal loans are generally higher than two wheeler loans.

The availability of a two-wheeler however depends on your eligibility. And the eligibility can be easily checked online.

If both the loans are available to you then opt for the one that is going to cost you less amount of money in the long run.

Which Is The Best Company To Finance A Motorcycle In India?

The company that is offering the least amount of interest rate and processing fee and the maximum tenure is the best company to finance a motorcycle.

Once you have made up your mind about financing the motorcycle, the next thing that might bother you is: Which is the best company to finance a motorcycle?

Well, the answer to this question is very simple. No company is best, every company in the market is there to earn some money. So always choose the one that is offering you the least amount of interest rate and processing fee. Also, choose the one that is offering at least 4 years of loan tenure.

Never stick to your home bank or favorite company. Evaluate your options well and then choose the one that is saving you some amount of money. If you want to check the interest rates of different companies then you can click here.

FAQs

Can I Finance A Motorcycle?

Yes, you can definitely finance a motorcycle. There are multiple banks and financial institutions in the market that offer two wheeler loans.

Can I Finance A Motorcycle Without A License?

No, you can not finance a motorcycle without a valid driving license.

Can I Finance A Motorcycle At 18?

Yes, you can finance a bike at 18 if you have a valid driving license.

How Many Years Can I Finance A Motorcycle?

You can finance a bike for a maximum of 5 years or 60 months.

Is Financing A Motorcycle A Bad Idea?

No, taking a two wheeler loan is actually a good idea. It offers you a lot of benefits.