The demand for two-wheeler loans has rapidly increased in recent times. Many young people are purchasing expensive bikes to fulfil their hobbies, and they are taking loans from banks. Banks are offering loans easily, as most of the borrowers are employed. Now, the question arises: is it better to take a personal loan or a two-wheeler loan to buy a bike? If you are also looking for an answer to this question, let us help you understand it. This will make it easier for you to make a decision.
Personal Loan
A personal loan provides funds for various purposes, and banks offer these loans easily. However, the interest rates on personal loans are higher compared to other types of loans.
Key Features of Personal Loans
- Flexible Use: The money from a personal loan can be used for any purpose. The bank does not require you to specify how you will spend the funds, so you can use it to buy a bike.
- Loan Amount: The amount you can borrow depends on your income and credit score, as set by the lender’s terms and conditions.
- No Collateral Required: Personal loans do not require any security or collateral.
- Interest Rates: Banks charge an annual interest rate ranging from 10.50% to 24% on personal loans.
Two-Wheeler Loan
A two-wheeler loan is specifically designed to help you purchase a bike. These loans typically have lower interest rates than personal loans because they are secured loans.
Key Features of Two-Wheeler Loans
- Loan Amount: Banks generally offer loans covering 80% to 90% of the bike’s cost.
- Interest Rates: The interest rates on two-wheeler loans are lower than those on personal loans.
- Eligibility: To qualify for a two-wheeler loan, banks assess your monthly income, job stability, and credit score.
Which One is Better?
Experts suggest that if you want a secured loan with lower interest rates, a two-wheeler loan is a better option. However, the benefit of a personal loan is its flexibility. A personal loan can provide additional funds for bike accessories, insurance, or other related costs, which a two-wheeler loan might not cover. Additionally, two-wheeler loans usually have a shorter repayment period, while personal loans have a longer repayment duration.
Ultimately, whether to choose a personal loan or a two-wheeler loan depends on your priorities and needs. It is important to compare interest rates, terms, charges, and eligibility criteria before deciding which loan is best for you.