Steps to carefully choose loan tenures for two-wheelers


The Covid-19 pandemic has radically altered our lives. We are rethinking our use of public transportation for both our daily commute and personal needs. As a result, we can see that an increasing number of individuals are opting for two-wheelers for personal mobility.

EMI, tenure, and interest rate are three main factors to consider while taking out a loan for a two-wheeler. On the surface, selecting the ideal tenure is simple but if you want to save money, you must make informed judgments. 

What is the significance of loan tenure?

The term ‘tenure’ refers to the length of time a borrower has to repay a loan obtained from a financial institution. It is expressed as several years. Borrowers frequently make the error of prioritizing EMI expenses above duration and interest rate.

Here’s how to pick the best two-wheeler loan period:

  1. 1-year tenure – This is the best option for clients who can afford to pay a bigger EMI amount at a lower interest rate. The buyer considers the cost of ownership in this case, and this set of purchasers has a steady income and would want to own the car right away.
  2. 2-year tenure– Two years is the most balanced. Compared to the 3 or 4-year tenures, buyers with a middle-class income pick this tenure since the EMI amount and the interest charges connected with it are regarded best.
  3. 3-year tenure– This tenure is appropriate for those who want to optimize monthly cash flows by paying smaller EMIs at a higher interest rate. There is a high-interest rate on longer-term loans because the longer the tenure, the higher the acquisition cost. So, certain moneylenders may demand a higher interest rate to compensate for the risks.

The Advantages of EMI :

Choosing EMI comes with a slew of advantages. The first and most obvious advantage of buying a two-wheeler on EMI is that you don’t have to pay the entire cost upfront. You can pay a portion of it each month using EMI. Regular on-time payments will help you build a better credit profile, which can help you get other loans in the future. The money you saved can also be used in times of crisis.

So, should you think about the loan term? You may or may not be able to do so. However, keep in mind that there is nothing like an optimal tenure term because it varies from person to person. In a word, it all comes down to you and your financial situation.

Follow and connect with us on Facebook, LinkedIn & Twitter