Buying a Two-Wheeler Using a Credit Card

Buying a bike using a credit card generally involves checking dealer acceptance, confirming your available limit, and completing the transaction at the dealership:

Step 1: Check Whether the Dealer Accepts Credit Card Payments

Confirm with the dealership whether credit card payments are accepted. You should also check whether the dealer allows the entire purchase price or only a part of it to be paid through a credit card.

Step 2: Check Your Available Credit Limit

Review your available credit limit to ensure it can accommodate the required transaction amount. If your existing limit is insufficient, you may check with your card issuer whether a temporary credit limit enhancement is available.

Step 3: Complete the Two Wheeler Payment Using Your Credit Card

Once the payment terms are confirmed, you can complete the purchase at the dealership using your credit card. The transaction will reduce your available credit limit by the amount charged.

A two-wheeler purchase made through a credit card works in much the same way as another high-value card transaction. The issuer settles the payment with the merchant, while the purchase amount is added to your credit card outstanding balance.

The repayment may then be handled in the following ways:

• Upfront Repayment: If you pay the entire credit card statement amount within the applicable interest-free period, no regular revolving interest is charged on the purchase.
• Merchant EMI Conversion: Some dealerships allow eligible transactions to be converted into EMIs at the point of sale.
• Post-purchase EMI Conversion: If EMI conversion is not available at the dealership, eligible cardholders may request their issuer to convert the transaction into EMIs through internet banking, the mobile app, or customer care.

An eligible bike purchase may be converted into monthly instalments, subject to the credit card issuer's terms. The process generally involves the following:

Check Credit Card EMI Eligibility

Before making the purchase, check whether your credit card supports EMI conversion for high-value transactions. After completing the payment, you can also review the eligible EMI options through your issuer's app or online banking portal.

Select the Preferred EMI Tenure

Choose from the repayment tenures offered by your card issuer. Depending on the provider, tenure options may range from 3 to 36 months. Longer repayment periods generally reduce the monthly instalment but increase the total interest payable.

Request EMI Conversion from the Bank

You can request EMI conversion through your card issuer's mobile app, online banking platform, or customer support channel. Certain eligible purchases may also support instant EMI conversion.

Review Interest Rates and Processing Charges

Check the applicable interest rate, processing fee, GST, and other charges before confirming the conversion. These costs increase the overall amount payable over the selected tenure.

You generally need to meet the card issuer's and dealership's transaction requirements before purchasing a two-wheeler through a credit card:

• Sufficient Credit Limit: Your available credit limit should be adequate for the transaction amount and any applicable merchant charges.
• Active Credit Card: The card should be active and enabled for the relevant point-of-sale transactions.
• Account in Good Standing: Your card account should generally not have overdue payments or restrictions.
• EMI Eligibility: If you plan to convert the purchase into instalments, the transaction and card account must meet the issuer's EMI eligibility criteria.
   

Disclaimer: Credit limit requirements, EMI eligibility, and transaction acceptance depend on the card issuer and dealership.

Purchasing a bike through a credit card can involve charges beyond the vehicle's purchase price. These may include:

Credit Card EMI Interest Charges

Interest may apply when a transaction is converted into a standard EMI plan. Rates may typically range from 5% to 12% p.a., depending on the issuer, card, and tenure.

Processing Fees

The card issuer may charge a one-time processing fee for converting the transaction into EMIs. This may be a fixed fee or a percentage of the transaction value.

Merchant Surcharge Fees

Some dealerships may levy a convenience fee or surcharge for accepting credit card payments, subject to their internal policies and payment arrangements.

Late Payment Charges

Delayed repayments can attract late payment fees, additional interest, and applicable GST based on the card issuer's terms.

Impact on Credit Utilisation

A high-value transaction can use a substantial portion of your available credit limit. This may temporarily increase your credit utilisation ratio and affect your overall credit profile.

Disclaimer: Interest rates, processing fees, merchant charges, and other costs vary by card issuer and merchant. Check the applicable terms before completing the transaction.

Using a credit card for a two-wheeler purchase may provide certain advantages, depending on the card and transaction terms:

• You may receive an interest-free period, typically ranging from 20 to 50 days, if the full statement balance is repaid by the due date.
• Eligible purchases may earn cashback or Reward Points, subject to the card issuer's reward programme.
• The transaction may be converted into EMIs to spread the repayment across several months.
• The payment can be completed without a separate vehicle loan application if sufficient credit is available.
• Card transactions and repayment details can be managed through the issuer's digital platforms.
• Timely repayment can contribute to maintaining a healthy credit history.

A credit card purchase can also involve additional costs and repayment considerations:

• EMI interest rates may be higher than those available on some dedicated two-wheeler loans.
• Processing fees and other charges can increase the overall purchase cost.
• Missed payments may result in late fees and additional interest.
• A large transaction can significantly reduce your available credit limit.
• EMI tenure options may be shorter than those available with vehicle loans.
• Delayed repayments and high credit utilisation can affect your credit profile.

Before using your credit card for a two-wheeler purchase, assess the transaction in relation to your available credit and repayment capacity:

• Check your available credit limit before proceeding.
• Review all applicable interest rates, processing fees, and merchant charges.
• Consider the effect of a high-value purchase on your credit utilisation ratio.
• Assess whether the resulting repayment fits within your monthly budget.
• Compare the overall cost with alternative financing options such as a two-wheeler loan.

Other financing options may also be considered for purchasing a two-wheeler:

Personal Loan

You can take a personal loan to purchase a bike and utilise it for any financial need. Personal loans are unsecured loans and have no end-use limitations. Therefore, you may use the funds for anything, from purchasing a device to covering medical expenses.

Two-Wheeler Loan

You can take a two-wheeler loan as an alternative to purchase a bike. Since it is a secured loan, your bike serves as collateral and security until the loan is repaid. In comparison to personal loans, the interest rate is lower. 

Several platforms provide this financing option. For instance, on Bajaj Markets, you can obtain a two-wheeler loan with an LTV ratio of up to LTV-100% Enjoy two-wheeler loan interest rates starting from 5.5% p.a. and repayment tenures of up to 60 months.

You can purchase a two-wheeler using a credit card if the dealership accepts card payments and sufficient credit is available. Eligible transactions may also be converted into monthly instalments through merchant EMI or post-purchase EMI conversion.

However, credit card purchases can involve interest charges, processing fees, merchant surcharges, shorter repayment tenures, and higher credit utilisation. Comparing these factors with dedicated two-wheeler loan or personal loan options can help you understand the overall borrowing cost before proceeding.