The first vehicle many people ever own is a two-wheeler. Bike ownership is a passion for many people, though, and not always a necessity. It’s finally time to bring home the bike you’ve always wanted!
But how should you purchase a bike? Should you use savings or a loan to pay for the purchase? These are some dilemma that every buyer faces. Bike loans are currently very reasonable. Nowadays, the majority of top financial institutions offer the lowest interest rates and 100% financing, making it possible to walk into a showroom and leave with your bike. Another option is to save money to avoid paying interest. Alternately, you could make the purchase of the bike by selling older assets. If the price of your bike is low, a credit card can also be useful.
Read: The Best Alternative To Borrowing Money from Friends
Start Saving For Your Bike NOW Than Getting Into Debt
So, which option you should choose? Should you rely on your savings, a personal loan, a bike loan, or a credit card? Let’s find out:
A personal loan is a short-term, unsecured loan that can be obtained from a variety of lenders, including banks, NBFCs, and online fintech lenders. When compared to other loans like home loans and education loans, personal loans have less stringent eligibility requirements and documentation requirements. Because they don’t require collateral or security, personal loans are easy to get.
Due to this reason, interest rates are on the higher side (starting from 16% onwards).
Read: Instant Cash Loan In 5 Minutes: 25 Instant Cash Loan Apps (Rs. 5000 to Rs. 5 lakhs)
The most popular method for purchasing a bike is by taking a bike loan from a bank or NBFC because it is affordable and requires little KYC documentation. You can also finance the entire amount or get a loan for the balance with a down payment. The majority of lenders approve applications for bike loans on the same day. As a result, you won’t have to wait long to buy your dream bike.
But, these loans come with high rates of interest, some even beginning at 10%. Also you need to have a good credit score (above 750) to avail a bike loan. Individuals who do not have a good credit score find it difficult to get a bike loan approved.
Read: How can you get a personal loan on a low CIBIL score? Learn Now
The next option to purchase a bike is by using a credit card. However, this strategy will only work if you select a bike with a lower price tag and your credit card’s credit limit allows you to spend that much. However, if the bike of your choice falls within the borrowing limit of your credit card, simply go to the bike dealership and swipe your card, and you will have access to the bike of your dreams.
You can use your credit card, but do so with caution. Because credit cards charge a high interest rate, you should only use one if you are confident that you will be able to pay your bills on time. In addition, depending on the lender’s policy, you may be required to pay the penalty and additional interest if you miss payments.
Read: Advantages and disadvantages of credit cards
How to Get Out of Credit Card Debt- Step by Step Guide
Join An Online Chit Fund Platform And Start Your Saving Journey
The best way to buy a bike is to use your savings. If you have enough money saved, you can pay off the entire amount and purchase the two-wheeler you always wanted without paying high interest. You can start setting a goal, i.e., the money needed to buy a bike, then set aside a part of your income to reach that goal. For example, you can start investing a certain amount every month in a chit scheme for the next 2 years for the bike which you are going to buy.
For example if you set aside Rs 3,000 every month for the chit scheme, after 2 years you will accumulate a lumpsum amount of approximately Rs 80,000 (keeping in mind that a chit scheme gives you at least 10% p.a. interest which is again much more compared to what banks give on fixed deposit).
On the other hand if you want to purchase the bike earlier, then anytime during the period of two years you can bid for the lumpsum amount and get your bike and continue to pay the remaining installments. Also investing Rs.3,000 every month is something which does not burn a hole in your pocket. It gives a great satisfaction that you are saving for something that you are going to really enjoy in the near future.
When you take out a loan, you are taking on someone else’s debt. As a result you end up paying EMIs that are greater than the amount borrowed. However, with chit funds, you are saving your own money. You are thus withdrawing your entitlement. You set money aside each month in both scenarios. A chit fund is an investment, but a loan requires payback. Consider the differences, then make up your own mind.
The Money Club is a reputed chit fund company based in Delhi. We are registered under the Chit Fund Act of 1982. We have been an excellent investment partner for people from all walks of life – employees, government employees, first time job holders, homemakers, entrepreneurs, senior citizens, and so on. We serve as your neighbour banker and secure your financial needs.
Read: Know Your Money Club platform Journey On The Money Club App
How Does The Money Club Mobile App Work? – The Money Club
Traditional Chit fund Companies vs The Money Club
Is it safe to invest in Chit Funds? Digital Vs Offline Chit Fund
Avoid paying high interest on bike loan, personal loan and credit card
How Chit Fund Helps?
Chit Funds have the advantage both as saving and as an investment. You can easily borrow the money in an emergency or continue as an investment.
- The money borrowed is against your own future contributions.
- The chit fund interest rate is 3-4 times more than the returns from bank FDs and RDs.
- Borrowing from banks requires you to fill up long forms and deposit piles of paperwork. In case of chit funds there is no paperwork required to borrow your money. You just have to participate in the bid.
How to join The Money Club
- Download the Money Club app from Google Play Store
- Get screened
- Once you get screened, our match-making algorithm will invite you to a club with other verified members.
- Pool up money with verified members and bid for the pooled amount. The highest bidder wins the pooled amount.
- Move up in the journey as you keep building your track record on the platform.
Read: How to Save Money from Salary? 15 Smart Tips
10 Bad Money Habits to Avoid in the New Year
Money manager apps: 5 best money management apps in India
8 Financial Advice From Some Of The Richest People In The World
10 Expert Wealth Creation Tips to Grow Your Money Now