Even though the debit card-linked loan is for two-wheelers, it works like a personal loan because hypothecation of the vehicle is not required
Festive season is just round the corner when new product launches and discount offers rain. Two-wheelers in India typically register the highest number of sales during Dussehra and Diwali period. Following the tradition, Federal Bank has come up with a complete paperless loan process for existing customers to purchase two-wheelers.
The EMI facility for two-wheeler purchase is for holders of Federal Bank debit cards. Eligible customers of Federal Bank will have to make a downpayment of Rs 1 at 947 at showrooms to avail this loan. The two-wheeler brands covered under this facility are Hero MotoCorp, Honda Motorcycle and TVS Motor.
The financing process involves no paper work or bank visit and is done completely online. Unlike conventional two-wheeler loans, hypothecation in favor of the Bank is not required for vehicles purchased on Debit Card EMI from Federal Bank. The maximum tenure of the loan can be in multiples of three months and maximum up to 12 months. No processing fee is charged on loans under this scheme.
Customers who purchase two-wheelers from 793 Honda Motorcycle showrooms across the country availing EMI on debit card from Federal Bank will also get a cash-back of 5 per cent as festival offer. With sale of passenger vehicles and two-wheelers showing an upward trend, such paperless financing facility will increase the financing choices for the borrowers.
The facility is similar to pre-approved loan offers in which banks assess the repayment capacity of the borrower based on their past banking history. This facility is only available for a set of eligible account holders. You can check your eligibility for EMI by sending an SMS in the format DC<space>EMI to 5676762 or giving a missed call to 7812900900.
Even though the debit card-linked loan is for two-wheelers, it works like a personal loan because hypothecation of the vehicle is not required. The interest rate charged by the bank on two-wheeler loans is 17 per cent for bikes below 500CC engine which is on the higher side of the rate charged for a personal loan.
If you have a good credit history, you may get a personal loan at lower rate. In case of average or no credit history you may have to settle with a higher interest rate. Therefore, it makes sense to compare the rates that you are getting on the debit card loan with other options available to you.