Buying a Two-Wheeler Using a Credit Card

Purchasing a two-wheeler is an exciting milestone and a step toward greater independence. Using a credit card to make the purchase may seem quick and convenient, but it requires careful consideration of interest rates, repayment terms, and overall affordability.

Comparing credit card offers and understanding EMI conversion charges can help you make a smarter financial decision.

If you want to know how to buy a bike using a credit card, there are a few things to know. Before buying a bike on a credit card, confirm in advance with the dealer whether they accept credit card payments. Here is how to use a credit card to purchase a two-wheeler:

• Step 1: Check if the Dealer Accepts Credit Cards

Visit various dealers and confirm which ones accept credit card payments. Also, verify whether they allow full or partial payments through a credit card.

• Step 2: Know Your Credit Limit

To cover the cost of the motorcycle, you need to check your credit card limit before proceeding with the purchase. You may request a temporary increase in your credit limit from your credit card issuer, if needed.

• Step 3: Pay for the Vehicle

After confirming all details, visit the dealer store and proceed with the purchase of your preferred motorcycle. Swipe your credit card to make the payment.

To simplify payments, you may convert the credit card purchase of the two-wheeler into an instalment plan. For high-value purchases, banks and financial institutions offer EMI conversion options. Below are the steps to follow for the process:

• Know the EMI Eligibility of Your Card

Before making the purchase, check the EMI eligibility on the credit card application. After the purchase, log in to your credit card provider’s app to check if EMI options are available for the transaction.

• Select a Suitable Tenure

Select a repayment tenure that suits your financial capacity. Depending on the provider, you may select a tenure ranging from 3 months to 36 months. However, longer tenures increase the total interest payable.

• Make an EMI Conversion Request

Request EMI conversion through your bank’s customer service portal or mobile app. Some banks and financial institutions also allow automatic conversion for eligible purchases.

• Check for the Interest Rate and Processing Fee

It is necessary to review the interest rate and any additional charges with your bank or credit card provider. Certain providers may apply a high interest rate along with a one-time processing fee.

• Acceptance and Payment

Once approved, your credit card statement will reflect the monthly EMI. You have to make payments on time to avoid penalties.

Here are some of the advantages of purchasing a two-wheeler on a credit card:

• Benefit from an interest-free period of typically 20 to 50 days if you repay the full amount before the due date

• Earn cashback or reward points on your two-wheeler purchase

• Convert your transaction into EMIs to ease monthly payments

• Gain instant purchasing power without lengthy loan application processes

• Manage all transactions and payments conveniently through your credit card app

• Build your credit score by making timely repayments on your EMIs

Buying a bike on credit card EMI has some disadvantages for the buyer. Some of them are listed below:

• Credit card EMIs often carry higher interest rates, increasing the total payment, especially over longer tenures

• Processing fees and hidden charges add to the principal, raising your net interest cost

• Missing an EMI incurs high penalties and interest, rapidly increasing your outstanding balance

• Easy credit access can lead to overspending and unmanageable debt after expensive purchases

• Credit card EMI tenure options may be limited, reducing flexibility in repayment

• Using credit card EMIs can negatively impact your credit score if payments are delayed

In addition to the pros and cons of buying a bike on credit card EMI, there are a few factors to consider before making your purchase. These include: 

• Before purchasing a two-wheeler, always check your credit card limit

• Be aware of all fees charged by banks, including processing fees and any applicable charges

• Consider the potential positive and negative impacts on your credit score prior to the transaction

• Consider if this purchase aligns with your long-term financial goals and budget

• Review the interest rates on your credit cards to understand possible additional expenses

Apart from purchasing a bike on credit card EMI, there are a few different loans you can consider. Some of them include:

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 100%. Enjoy two-wheeler loan interest rates starting from 0.99% p.a. and repayment tenures of up to 60 months.

As long as the dealer accepts credit card payments, you may use a credit card to purchase a motorcycle and convert the transaction into an instalment plan. For many individuals, using a credit card to finance a two-wheeler may seem convenient. 

However, it is important to evaluate both the advantages and disadvantages. Using credit cards responsibly can help improve your credit score and offer quick EMI conversion options. However, credit cards typically have shorter repayment terms, higher interest rates, and can increase your credit utilisation ratio.

Use your credit card with caution and ensure timely repayment when choosing to purchase a two-wheeler through this method.

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