In this blog we will walk you through different interest rates offered by different banks on superbike loan and also we will discuss few important things to remember before approaching a bank for a loan. Because we feel, the best buyer is the most well-informed one.
Our responsibility is to inform you to the best of our abilities.
We are assuming that you can’t pay the total amount in one go, without having to sleep hungry for the next five years.
There are two types of two-wheeler loans.
- Secured: YOu can obtain a two-wheeler loan against an asset like, piece of land, gold etc. Or, you can state your bike as collateral. As you are securing your loan against a valuable asset, the interest rates are likely to be lower.
- Unsecured: Loans are unsecured against any assets.
Depending on amount to be loaned, they are further classified in to:-
- Two-wheeler Loans
- Superbike loans (Lower interest rate than two-wheeler loan)
Any loan above Rs. 3 lakhs is classified as a superbike loan, if and only if, the bank specifies so.
Superbike loan has a lower interest rate because superbikes are costly. And as the interest amount is directly proportional to loan amount, banks can get a profit even with a lower interest rate. It is only fair.
Q: What qualifies as a Superbike?
Any bike with an engine equivalent to the engine of a small car is called a superbike. Generally, bikes having engines greater than 750cc in capacity are called superbikes. But due to the availability of a number of bikes in the middle weight range, bikes having 650cc engine can also be called superbike. But for that, you have to check with your bank about the parameters they have in place.
Interest Rate Comparison
|Bank||Interest Rate (Motorcycle loan)||Amount||Tenure||Features|
|TATA Capital||10.75%||Rs. 25,000-3,00,000||6-60 months||Zero Down payment|
|HDFC 2-wheeler Loan||20.27%||–||12-36 months||100% Finance|
|HDFC Superbike Loan||12.46%||12-48 months||upto 100% Finance|
|Bajaj Finserv||10.99% Onwards||–||–||Transparent Process|
|Yes Bank||10-18 %||Upto 25 Lakhs||Upto 60 Months||Part Prepayment Options|
|Shriram City||12% onwards||–||12-36 months||Competitive interest rates|
|Bajaj Auto Finance||7.85% Onwards||36 months||Low interest rates|
|SBI two-wheeler loan||16.05% onwards||30,000-2,50,000||36 months||dependable|
|SBI Superbike Loan||10.25% onwards||Upto 25 Lakhs||36 months||Low interest rate|
Note: The interest rates provided may vary from places to places. This is to give you an approximate idea.
Interest rate may vary according to repayment capacity of the borrower. Other factors such as past loans, active loans, CIBIL score, salary of the borrower, nature of job whether government service or personal business, etc.
Documents required to get a Superbike Loan
- Household Utility Bills
- Voter ID
- Driver’s License
- Sale deed
- Property Purchase Agreement
- Rental agreement
- LIC Policy
- Letter from Company or Company Provided Accomodation (List of the company’s as per the Banks List – ID card of MNC/Public Ltd./PSU/Govt. Company, containing the residence address)
Any one of the above.
All the above, except utility bills, qualify as Identity proof. Along with:
- Photo Credit Card (Front and reverse)
- PAN Card
- Ration Card (If photo Provided)
- Copy of Company ID card of MNC/Public Ltd./PSU/Govt. Company
For Salaried: Last salary slip for Govt. Employees. If not available, salary certificate. For Partnership/Proprietary firms & Pvt. Ltd. Co’s- Salary Certificate to clearly state the deductions, and Name & Designation of the authorised signatory.
For self-employed: Copy of the latest income tax return.
How to get a two-wheeler/superbike loan?
Select The Perfect Bank
First thing is to select the bank offering the lowest interest rate. You can google or use non-aggregator sites like Bankbazaar to know different rates being offered.
Check Your Credit Score
Next, you need to check your credit score. The closer your score is to 900, the better. If you have a bad score, you should look at ways to improve it before you apply. Banks generally want customers who pay their money on time, they would even give you a good interest rate, if they value you as a customer.
How Much Are You Eligible For?
Banks won’t give you 10 lakhs, if you 1 lakh in your account, and you don’t have any source of income. Banks may check your Income Tax Returns (ITRs), your salary is evaluated, which may assist them in determining your repayment capacity. However, having good relationship may help you negotiate with them.
Salaried professional may get a lower interest rate as compared to self-employed people, because of the uncertainty associated with self-employment.
Negotiating A Better Deal
There are a few strategy to implement while negotiating.
- Never be aggressive. Be polite and friendly. Bigger the amount, better the deal you will get.
- Loan is sold by sales guys, and like all sales guys they have a monthly target to achieve. Always submit you documents in the beginning of the month and ask the sales guy for a quote, don’t accept it till the last few days of the month. Each time they tempt you by slightly reducing the rate, you tell them what you want.
- Always negotiate hard for reducing processing fee, documentation fee and avoiding any margin money.
- Check if they charge any prepayment penalty or foreclosure charges.
Jargon Used By Salespersons
Processing Fee: Most of the bank charge a minimum of 3% of the loan amount as a processing fee, which is atrocious . Because you are already paying a heavy interest on the money. They also charge a documentation fee, just because they bothered to check your credentials. Try to negotiate ZERO processing fee and documentation fee.
Margin Money: Margin money is your contribution to the loan. For e.g. if you borrow 1 lakh, bank will ask you to pay, let’s say 25%, i.e. 25,000 as your margin money. Sometimes they may also ask you to pay advance EMIs. In that cay the loan disbursed will be much less then the sanctioned loan amount. So, you will pay a higher processing fee.
Prepayment Penalty: A prepayment penalty is a fee or charges that you have to pay to the bank if you decide to repay a loan before the end of its term. Isn’t that ridiculous. Why should a finance institution penalise you for paying back their loan? It is your money and if you have surplus, why can’t you save interest?
Remember to negotiate hard, but politely and try to avoid these atrocious fees and charges. If you have good relationships and if you play your cards right, you might get a better deal.
Type Of Interest Rate And Their Effects
The EMI that you pay each month might be fixed for the entire tenure of the loan, as in case of Fixed Interest Rate or it may vary according to the inflation, which is called Variable Interest Rate. In case of variable interest rate, the rate is directly proportional to the repo rate decided by the RBI.
If the interest which is imposed on a personal loan is calculated on a compound basis. A Compound Interest rate means interest will be charged on outstanding principal as well as the unpaid interest amount. A compound interest rate with a short tenure will be beneficial.
By now, you might have learned some new terms and have got a fair idea about how to go about getting a fair deal with your bank.We hope you cut a good deal and the information we shared helps in it.