Two wheeler loans have been introduced as affordable financing options that allow individuals across income classes to secure bike ownership. You may thus expect to receive competitive two wheeler loan interest rate when seeking bike financing in the first place. However, since affordability is subjective and may vary from one individual or household to another, one can always attempt to take the steps that help secure the lowest rates possible. And plus, bike financing can always be preferable when there’s a chance to reduce the applicable cost.
So, even though you might have got a suitable financing option with affordable rate levy, it won’t hurt to apply a few tips and tricks for further reduction of interest rate levy, or the interest accrual for that matter. Let’s find out some common ways that can help secure a low interest rate on a two wheeler loan.
Ways to Reduce Your Two Wheeler Loan Interest Rate
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Compare available lenders in the market thoroughly
The one and most useful step you can start with when seeking to reduce your two wheeler loan interest rate would be to compare available lenders in the market. If you are not well aware of the rates applicable in the market, there are chances that you would settle for an interest rate levy that is not the lowest, which would keep you away from the possible cost-effectiveness.
It is thus advisable that you conduct a thorough research of the market and narrow down available financial institutions accordingly to choose from. Note that you may not want to decide on the lender based on interest rate only as other factors take precedence as well when seeking a bike loan.
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Reduce your fixed-obligation-to-income ratio
It is possible that you may be servicing multiple loans simultaneously when seeking a new loan for bike financing. While loans are useful financing options, they sure bring down the future borrowing capacity of the individual, keeping him/her in a risky spot when seeking new financing. It is thus ideal that you pay off existing debts so that your fixed-obligation-to-income ratio goes down, making room for new EMIs.
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Apply with a credit score above 700
A credit score above 700 indicates a high creditworthiness and allows the lender to see in good light the individual’s borrowing capacity. It is thus suggested that you apply once you have checked and worked on your score to bring it to this benchmark.
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Approach a lender you have pre-existing relations with
Applying for the loan with a lender you hold pre-existing relationship with keeps your terms of financing open. It enables for better negotiation on the two wheeler loan interest rate as the lender has all necessary records related to your credit history and knows the financial discipline you hold.
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Choose to balance transfer your bike loan
In case you have already availed a bike loan, the chances for interest rate reduction still to exist in the form of refinancing. Under the balance transfer facility, you can choose to refinance your loan outstanding with a new lender offering lower rates of interest than the existing one. The facility also opens doors for negotiations on other terms of your loan for convenient borrowing.
Alongside these ways, you can also apply for your advance with all available income documents instead of just primary documents, which should represent a high repayment capacity. As a result, the lending institution can be convinced for loan approval at a low two wheeler loan interest rate. Along with interest rate, however, keep a lookout for other applicable fees and charges as well, which should help check the total cost of your loan and improve the overall loan affordability.
