Having a two-wheeler is a must in today’s time and is readily available, thanks to the financing system. Almost everyone relies on loans to buy the things they desire, and a two-wheeler loan is one of them. Most of the financing institutions offer 90%-100% loan on bikes, and because of that, it is easy working professionals to have the two-wheeler they need.
Bike finance interest rate vary from one institution to another and in some other individual factors also. In this article, we are going to learn about some factors that affect the bike finance interest rate concerning Muthootcap, which is the best financial institution for a two-wheeler loan.
1. NET INCOME
Your net annual income is the first and foremost factor considered while you apply for any loan. Your annual income is assessed to gauge the financial stability and to be sure that the person can pay the loan back with interest. For a bike, the low earners are also able to get loans, but they have to pay a high-interest rate. The more the income, the less the interest. Muthootcap provides loans on income base, non–income base and on asset base.
2. OTHER LOAN PAYMENTS
The loan lenders will look into your other loans like home loans, personal loans etc., to ascertain the situation of your disposable income, which is the income left for personal use. Higher the disposable income the lower is the interest rate.
3. INCOME STABILITY
Income stability comes from a stable job in a reputed company or if you are self-employed and the earnings are regular. You must have a steady income, or in case of self-employment, you need to show your past payments to the lenders so that the loan provider is assured that the loan will be paid regularly.
4. REPAYMENT HISTORY AND PRIOR DEFAULT
Your net income describes your ability to pay, and your past defaults or payment consistency describes your willingness to pay. The interest rate on a two-wheeler from the lender’s viewpoint is based upon the customer’s past performance in repayment of the loan.
5. DOWN PAYMENT
The higher the down payment, the less is the remaining amount to pay and therefore, the less is the interest rate.
6. LOAN TERM
The longer loan term has a lower interest rate because of the period to pay back the loan. A short duration of loan requires a higher interest to pay.
CONCLUSION
As mentioned above, there are many factors a financial institution needs to consider before providing a loan for a two-wheeler and second hand car finance, and these are the factors which affect the interest rate of the loan. As there are many financial institutions which provide loans, you should always do your research as to which one suits you the best. Muthootcap is undoubtedly the best in providing 100% bike loans at a minimal rate of interest to a different variety of income earners.
