Buy a Bike Using a Credit Card: Process, Benefits & Tips

When we purchase a bike, the question arises, shall I make a complete payment or use a credit card to pay? Credit cards have always been popular, and with growing competition in today's world, the rewards of credit cards have become very exciting. One such benefit of having a credit card is that you can purchase your bike using it. This article discusses the eligibility criteria for purchasing a bike on your credit card, factors to consider, process, etc.

Who Can Buy a Bike with a Credit Card?

Banks impose some eligibility criteria on the purchase of products by credit cards to ensure that the customer can pay back for the purchase. To check your eligibility, you can access the bank's loan eligibility tool or EMI calculator on their official website. 

If you are using your credit card for the down payment, ensure that you pay the credit card bill on time to avoid interest charges and penalties. Failure to complete payment on time not only makes you pay more but also hurts your credit score which might restrict you from making specific purchases.

What is the Process of Buying a Bike Using a Credit Card?

We’ve provided the process of buying a bike using a credit card below. You should follow these steps to buy a bike with your credit card:

• Step 1: Keep in mind the cost of tax and insurance, and consider the on-road price of the bike before making a decision. Set a budget accordingly and find a bike within the budget.
• Step 2: Check the availability of credit and the validity of the credit card. You must know if the funds available are sufficient to pay the bill.
• Step 3: Check the working status of your credit card, cards that haven't been used for a long time or have expired might need to get renewed.
• Step 4: If your credit limit is less than the cost of the bike, increase your credit limit by paying off the previous balances.
• Step 5: Go through the terms and conditions carefully and sign the necessary documents to complete the purchase.

What Happens If You Use a Credit Card to Buy a New Bike?

By using a credit card you can finance your purchase with EMIs where you can repay the installments in a given tenure which is usually not more than 2 years. By making payments through a credit card, you can improve your credit score and increase your CIBIL (Credit Information Bureau India Limited)  score as well.

When your money is in banks or invested in stocks, mutual funds, etc. it is growing with time. Purchasing through credit cards avoids heavy cash out from your bank or investments which allows your money to grow for a longer time. 

Before purchasing a bike with your credit card, keep in mind that it is very important to pay your installments on time. If you fail to pay on time you will end up paying high interest and penalties, moreover, it will affect your credit score as well. 

Factors to Consider Before Buying a Bike Using a Credit Card

While you are making up your mind on selecting the payment method for your bike, there are factors to keep in mind while using a credit card. These factors are:

• Make sure the price of the bike does not cross the limit of your card.
• A clean and good credit history makes the purchase process easier, hence always pay your bills on time and limit your spending in a way that you can repay easily as well.
• Always check the eligibility for rewards and cashback in case of making purchases through credit cards.
• Make sure you check for available discounts on purchases using a credit card. 

Important Note: Please note that rates of interest on buying a new bike and a used bike with a credit card might vary.

Credit Card Or Two Wheeler Loan – Which Is Better Option?

While buying two-wheelers, buyers have two options to finance their vehicle - through credit card or a two-wheeler loan from the bank. Both sources are different kinds of loans. Choosing between the two depends on your financial situation and loan repayment capability. Here are a few factors to consider when choosing between the two.

Purchasing Two-Wheeler With Credit Cards

A credit card is an excellent option to finance your two-wheeler dreams if you have the necessary credit limit and the means to repay the loan in a short period. However, keep in mind that the interest rates for credit cards are higher than that for a bank loan. Using a credit card is more convenient as buyers do not have to go through a lengthy application process to access the required funds. Credit cards also allow a moratorium period of 20 to 50 days for beneficiaries to arrange for repayment. When you purchase something as major as a bike with the help of your credit card, you become eligible for rewards and cashbacks from the credit card company. One can also convert their purchase into EMIs for upto 2 years tenure. On the flipside, credit card interest rates are higher than bank loan interest rates and purchasing a two-wheeler is possible only when you have the necessary credit limit and good credit score.

Buying A Two-Wheeler With A Bank Loan

A bank loan is a good option to consider if you do not possess a credit card. Bank loans take time, however, they come with lower interest rates, starting at 9% p.a. and longer repayment terms, typically upto 4 years. Here are the advantages and disadvantages of financing your two wheeler with the help of a bank loan. Certain bank loans have the provision to cover insurance purchase and registration costs. Bank loans also cover upto 95% of the total cost, thus eliminating the need to pay a hefty amount upfront.

Conclusion

There are various benefits of buying a vehicle such as a bike with a credit card. Although you can get easy financing with a credit card, it is important to use it wisely. For this, you must keep in mind the factors affecting your credit score. It is also important to choose an EMI option that can be managed easily to avoid any potential penalties. Hence, it is advised to build a good credit history by paying the EMI installments on time.

Frequently Asked Questions (FAQs)

Ques 1. Can I only use my credit card to buy a bike?

Ans. No, you can use your credit card to buy any two-wheeler like a bike or a scooter. Additionally, you can use it to cover the costs of a car as well.

Ques 2. What is a major advantage of using a credit card?

Ans. If you pay your dues on time, your credit card score will improve. This will make you eligible for future loans and other rewards/ cashback.

Ques 3. Are interest rates important while using a credit card?

Ans. Yes, the interest rates will impact your EMIs. Hence, you should check the interest rates so that you can pay the installments easily.

Ques 4. Can you Buy a Two-Wheeler With Bad Credit?

In most cases, it is not possible to buy a two wheeler with the help of a credit card or a bank loan, as both parties look at your credit score before granting the necessary funds.

References:

https://www.bajajfinserv.in/can-i-buy-bike-on-credit-card (1)

https://www.icicibank.com/blogs/process-of-buying-a-bank-on-emi (2)

https://finimpact.com/personal-loans/how-to-buy-a-motorcycle/buy-motorcycle-with-credit-card.html (3)

https://www.tatacapital.com/blog/loan-for-vehicle/is-it-advisable-to-buy-a-two-wheeler-on-a-credit-card/ (4)