Personal loan vs two wheeler loan

What is a personal loan?

It is an unsecured loan that can be applied at any bank or NBFC. You can use the funds you get from a personal loan for various purposes like debt consolidation, vacation, wedding, child's education or miscellaneous expenses. Banks don't monitor the usage of funds that have been given through personal loans. So customers have the flexibility to use it however they want. 

You'll have to repay the loan amount that has been given through a personal loan in instalments along with the interest rate. However, the interest rate of personal loan is comparatively higher than two-wheeler loan. 

Banks only approve your application if you're eligible. So you'll have to meet all their eligibility criteria to get your application approved. Your credit score plays a significant role in determining your eligibility. You can quickly get your loan approved and disbursed if you have a good credit score. But if your credit score is insufficient or inadequate, some banks like Dena Bank two-wheeler loan or Axis Bank can reject your application. But some lenders will approve your application. Instead, they'll charge you with a high-interest rate. 

So it's essential to maintain a decent credit score. In case you're unable to repay the loan amount, then it will negatively affect your credit score. And a bad credit score can make it hard for you to get a loan next time. 

Advantages of personal loan

Let's check all the advantages that can be availed if we're purchasing a two-wheeler through a personal loan: 

1. Flexibility: Customers get the flexibility to use the money however they want. So there's no restriction on the usage of funds. They can use the funds they get for various purposes at the same time.
2. Down payment: You don't necessarily have to make a down payment. 
3. Interest Rate: The interest rate of personal loans is very high. It starts from 10%. 
4. Application: The application process is very easy and can be processed in a few days. The approval time is less when compared to other loans. 
5. Credit score: You have to maintain a decent credit score to avail the facility of a personal loan.
   
   

What is a two-wheeler loan? 

A two-wheeler loan can be both a secured and an unsecured loan. It depends from one borrower to another. A lot of banks and NBFCs (Non-Banking Financial Companies) across the nation provide this loan option. The funds that are given by the bank through a two-wheeler loan can only be used to purchase a two-wheeler. Therefore, a lot of banks disburse the money to the dealer bank account instead of the borrower.

Advantages of two-wheeler loan

1. Usage: The money you get from a two-wheeler loan can only be used to purchase a bike, scooter, or another two-wheeler. 
2. Down payment: Banks ask for at least 10%-20% down payment of the on-road cost of the two-wheeler. Making a huge down payment can help you to reduce your burden of paying a huge EMI. You will also save a lot of money that would've paid as the interest rate. 
3. Interest Rate: The interest rate of two where a loan is a lot less when compared to the personal loan. You can reduce your interest rate even more if you are eligible and can negotiate. 
4. Application: The application process of a two-wheeler loan is not as fast as a personal loan. But banks try their best to process the loan as fast as possible because it takes time to coordinate with the vehicle dealer and the lender. 
5. Credit score: If you're applying for a two-wheeler loan as an unsecured loan, then you'll have to maintain a good credit score. But if you're applying for this loan as a secured loan, then you can be relaxed as there is collateral.
   
   

Conclusion: 

Both personal loan and two-wheeler loan has it's advantage, feature and benefit. You can compare all the factors and then check which one is the best loan option according to your situation and requirements.

Also read this: During and after mistakes of personal loan