In the realm of purchasing a two-wheeler, the thought of utilizing a credit card for the transaction often arises. This consideration is not uncommon, as it comes with its set of advantages and disadvantages. In this comprehensive analysis, we will delve into the intricacies of when it is prudent to acquire a two-wheeler through a credit card, and when it may not be the most judicious course of action.
Pros of Utilizing a Credit Card
1. Expedited EMI Settlements
Opting for credit card-based EMIs to facilitate the acquisition of a two-wheeler is particularly advantageous when expeditious repayment is a priority. Many credit card issuers extend tenures of up to two years, allowing for a swift resolution of installments. Consequently, employing a credit card for this purpose enables one to efficiently clear their dues, ensuring a streamlined financial trajectory.
2. Augmented Credit Score
It is noteworthy that credit bureaus take into account your credit card transactions when evaluating your CIBIL score. This implies that judicious management of credit card usage, coupled with the timely settlement of outstanding bills in full, contributes positively to your creditworthiness. Therefore, if augmenting your credit score is an objective, acquiring a two-wheeler through a credit card proves to be an astute choice.
By consistently honoring credit card EMI commitments, you not only enhance your CIBIL score but also position yourself favorably for future loan applications. It is imperative, however, to exercise prudence and avoid exhausting more than 30% of your credit limit, as this can potentially hurt your CIBIL score.
Cons of Utilizing a Credit Card
1. Elevated Interest Rates
While credit cards offer expeditious EMI settlements, they do come with a downside in the form of higher interest rates. Credit card-based EMIs may encompass interest rates ranging from 14-18%, coupled with processing fees that vary depending on the card issuer and tenure. In addition, opting for shorter tenures may lead to larger EMIs, potentially exerting a substantial strain on one’s monthly finances.
In contrast, procuring a two-wheeler loan often comes with significantly lower interest rates, typically falling between 10-13%. With esteemed institutions such as Tata Capital, one can secure bike finance with an enticing rate commencing at 10.75%. Moreover, the availability of loan tenures extending up to five years facilitates comfortable repayment through smaller, more manageable installments.
2. Access to Preferable Loan Offers
Possessing an exemplary CIBIL score, ideally at 750 or above, allows you to qualify for loans that cover 100% of your purchase costs with ease. Moreover, individuals with stellar credit histories can negotiate loan terms to secure more favorable bike loan interest rates and flexible EMI tenures.
In essence, the decision to procure a two-wheeler through a credit card hinges on various factors, including one’s repayment capacity, financial robustness, choice of vehicle, CIBIL score, and other pertinent considerations. It is imperative to meticulously weigh the pros and cons outlined above to make an informed decision that aligns with your individual financial goals.
For those in pursuit of bike finance featuring alluring loan interest rates, Tata Capital stands as a reliable partner. Avail up to 100% funding for your coveted ride, complemented by flexible EMI plans and extended tenures. Our streamlined application process ensures a seamless experience, enabling you to bring home your dream bike without unnecessary hassle.