Difference Between Two-Wheeler Loan and Car Loan

Owning a vehicle is a dream many people nurture. Having your own vehicle means that you can commute at your leisure and convenience. However, the cost of two-wheelers and cars is rising every year. Thanks to several loaning facilities available in the market, you can easily apply for a vehicle loan to realise your dream of buying a car.

Once you decide to own a vehicle, you need to decide whether you want a two-wheeler or a four-wheeler. There are loan facilities available for both kinds of choices, but it is imperative to know what both of these choices entail in terms of a loan.

Due to recent improvements, loan applications are now processed quickly and easily. You can choose from a variety of plans and options, especially when it comes to automobiles.

The majority of applicants end up postponing their application procedure since they are ignorant of the difference between a two-wheeler and a car loan.

To choose the one that is best for you, you should understand how they differ from one another. This article attempts to explain and highlight the main differences between a two-wheeler and a car loan.

Two-Wheeler Loans Versus Car Loans

Compared to a car loan, a two-wheeler loan is very different. Even though both two-wheeler loans and car loans are classified as vehicle loans, the lender sees them as two different investments, thus there are some variances between the two. Bike prices are typically lower than car prices.

Due to its affordability as a means of transportation and the rise in fuel prices, motorcycle use has increased among the general public. Additionally, COVID-19 and the rise in home delivery jobs have raised the demand for motorcycles and decreased default rates.

Because of all these variables, getting a loan for a two-wheeler is easier than getting a loan for a car.

How Do Two-Wheeler Loans Differ From Car Loans?

Though both are vehicle loans, two-wheeler loans and car loans differ from each other in the following aspects:

• Compared to a car loan, a bike loan has distinct eligibility requirements.
• The repayment period of a bike loan is also shorter than that of a car loan.
• Though the interest rates are not fixed, the bike loan interest rate is different from the vehicle loan interest rate. It varies depending on the lender.
• Typically, a car loan is sanctioned for a significantly larger loan amount than a two-wheeler loan.

These differences are further explained in a detailed manner below:

Eligibility Criteria

In comparison to a two-wheeler loan, a car loan has more stringent eligibility requirements. Your credit history, past repayment behaviour, history of prior loans, defaults, level of income stability, etc. will all be examined by the lender if you apply for a car loan. Nevertheless, it is simple to obtain a bike loan. You may easily apply for a bike loan because the procedure is straightforward.

Repayment Tenure

A bike loan has a shorter repayment period than a car loan. When compared to a car loan, which can last up to 5 years, a bike loan typically has a payback period of 2—3 years, though this can vary depending on the lender and be extended. The age of the vehicle at the time of purchase plus the loan’s term shouldn’t be greater than 10 years (in special cases, 12 years).

Rate of interest

A two-wheeler loan often carries a lower interest rate than a car loan. Despite this, there are several circumstances in which the interest rate for the bike loan may be higher. The same lender may charge varying interest rates for two-wheeler loans to various bike manufacturers. The financing rates on premium motorcycles are lower than those on regular vehicles. Two-wheelers loans have a different interest rate structure than car loans.

Similarities Between Two-Wheeler and Bike Loans

Loans for a motorcycle and a car are comparable. You can reasonably understand how to apply for a motorcycle loan, provided you have the right information about the various aspects of the loan process. Additionally, knowing the distinctions and parallels between loans for two-wheelers, cars, and even used cars will help you make the best choice.

Automobile and bike loans have numerous differences, but they also have many similarities. For the most part, the same documents are needed for loan processing. Salary stubs, evidence of income, bank statements, proof of residency, identity proof, PAN cards, etc. are the primary documents needed. Both automobile and bike loans are secured loans.

How to Get a Motorcycle Loan?

After comparing the two types of loans—two-wheeler and four-wheeler—we can now look at the motorcycle loan application process. Of course, the loan application process is handled in a somewhat different way by each lender. The fundamental steps that must be taken to obtain a two-wheeler loan are similar.

To learn more about how to apply for a motorcycle loan, read the following pointers:

• Complete the loan application with personal information and bike information.
• Determine your eligibility and the repayment period.
• Get your loan approved.
• Get your loan acceptance letter from the lender next.
• Go to the store where you want to buy your dream bike and buy it. 

Summing it Up

Car and bike loans differ, although they are nonetheless comparable in many ways. If you’re thinking about buying a bike, you should first look into the lenders who are providing the greatest interest rates on the market. Concerning loan tenure, interest rates change. So, make an effort to appropriately adapt the loan term for the bike. Purchasing a car has a similar process. Visit Piramal Finance’s website to know more about vehicle loans and other products and services offered by them.