Buying a two-wheeler is one of the major financial decisions most of us have to make, barring, of course, those who are born with a silver or gold spoon in their mouths
Even though the sum of money involved is considerable, we tend to readily jump at any financial deal that comes our way or try to bargain for some kind of discount. We rarely look at the alternatives that actually can save us some money.
It’s definitely a lot more fun to drool over bikes on the Internet and those on display at the showrooms than to read through a stack of financial papers, but these documents are legally binding and can become a burden quicker than you think. However, if you want to save a little money (which most of us do), it’s worth spending some time on the financial part of buying a two-wheeler. Signing the right financial document can save you some money.
Cash Is Best
In an ideal world, cash is the king. Walk into a showroom with a wad of greenbacks and you can be sure of being treated like a Bollywood star. You will also be able to negotiate for a better price and be free of the daunting interest rates. Alternatively, you may seek a personal loan from your local bank and take that money straight to the showroom and pick up your bike. Local and smaller banks usually offer you a better rate of interest than what the showroom tie-up banks will offer you. This brings us to the next point.
If you take a personal loan to purchase your two-wheeler, you will pay a fixed monthly amount over a period of time. Besides shelling out a certain amount for the down payment, your equated monthly instalment (EMI) will include a part of the amount due along with interest. In order to save on the amount of interest to be paid every month, you may consider a higher down payment and spread the loan amount over fewer months. In such a case not only will your EMI amount be less, you will also end up saving on the interest amount you would otherwise pay in case of a smaller down payment.
Hire purchase is one of the longest established ways of buying a two-wheeler. You go to the showroom, pick the two-wheeler you want and you put down a deposit. Then you pay fixed monthly instalments over a fixed period of time until the value of the bike and interest at whatever rate was originally agreed upon is paid. Unlike in loans, you do not own the bike until the last payment is made. Which means that it can be re-possessed if you stop paying. Also if you decide to sell the bike privately before the end of the hire purchase period, you will need to settle the finance first.
Pay By Card
You will probably not buy a high-end bike and put the bill on your credit-card. However, if you are shopping in the lower range, it makes for a good financial deal. Many credit-card companies now-a-days offer you a zero per cent interest for up to six months, in some cases for nine, and this can be a good way to spread out your payment without having to pay any interest at all. Regardless of how you finance a two-wheeler, it is worth putting 10-20 per cent of the cost on a credit-card, even if it’s only the deposit. So if you need a refund or the dealer you bought the two-wheeler from goes under, you’ll be able to claim the money back from the credit-card company.