Two-Wheeler Loan! Applicant’s Dilemma!
Majority of the people in India choose to avail a two-wheeler loan even if they have the necessary cash or funds to purchase the vehicle outright. The reason for doing so is that a two-wheeler loan provides the option of paying back the amount in EMIs. The EMIs are large enough to repay the loan in due time but not large enough to put a major financial dent on your funds. As a result, two-wheeler loans are one of the best products of banks, NBFCs (Non Banking Financial Companies), and lenders. The popularity of two-wheeler loan, in particular bike loan without down payment, has led lenders to compete with each other. Thus, people now have numerous choices that offer attractive interest rates and EMIs in addition to other perks such as instant loans and loans for used bikes among others to entice the customers.
However, people now numerous choices for buying their dream bike or scooter. As a result, they are bombarded with different perks and offers, but most do not know the requirements of applying for two-wheeler loan or all factors that need to be considered before applying for bike loan. So, without further ado, here are some key factors that you need to know about two-wheeler loans.
The process of Availing A Two-Wheeler Loan
There are two methods two apply for bike or scooter loans: Online and Offline. However, the steps for applying for the loan largely remain the same, they are:
- Research interest rates and tenure of different lenders or bank, and use two-wheeler loan EMI calculator to assess feasibility. Additionally, you should check out the documents that the lender requires and the complexity of documentation process.
- Check eligibility criteria to ensure that you meet all the requirements of the bank or lender.
- Select the bank or lender that best suits your needs. Remember that you should also consider factors such as urgency of loan, etc.
- Ensuring that you have all the right documents to complete the documentation process.
- The best step of the process: Get your dream bike or scooter.
Eligibility Criteria to Apply for Two-Wheeler Loan
Since majority of the bike loans are unsecured, banks are extremely cautious and ensure that their customers are capable of repaying the loan. Every bank or lender will have their own set of eligibility requirements. However, here is the general eligibility criterion:
| Factors | Requirements |
| Age | Between 21 and 65 years of age. Some banks have minimum age as low as 16 for mopeds and electric scooters |
| Credit Score | Preferably 750 and above. However, a score below 750 will make you eligible but the interest rate would be higher |
| Minimum Annual Income | INR 75,000 |
| Employment Status | Self-employed or Salaried |
Documents Required for Bike Loans
It is important to remember that while eligibility criteria are important to avail a loan, not having the required documentation to back that information will lead to a rejection. Just like eligibility criteria, every bank may have different documentation process and requirement of documents. However, here are the most basic documents that you may require:
| Type of Documents | Requirement |
| Photo Identity Proof | 2-6 passport size photographs |
| Identity Proof | The following are considered as identity proof:PAN CardPassportAadhar CardDriving LicenseElectoral Voter ID Card |
| Proof of Employment | For self-employed Individuals:The Last Form 16Proof of income sourceBank StatementFor salaried individuals:Salary SlipsOffer letter or letter of employmentBank Statements |
Interest Rates for Two-Wheeler Loan
The interest rates for two-wheeler loans vary based on numerous factors such as your credit score, the tenure of the loan, and the type and nature of the bike or scooter. The rate of interest could be as low as 11% and as high as 18.25% depending on the factors mentioned above and your choice of lender. If you want to know which banks you should consider, check out banks that offer the lowest two-wheeler loan interest rate.
Instant Two-Wheeler Loan At PaySense!
Applying to a bank for a two-wheeler loan is a safe and conventional option. But, in the age of information, there are better lenders in the digital world. While the banks offer slightly lower interest rates, they have a lot of drawbacks that include tedious documentation and time-consuming approval process. Additionally, some banks do not allow you to use the loan to purchase a secondhand bike or scooter. Not only does PaySense offer you loans for both new and used two-wheelers, you also get instant approval for the loan. So, do not wait, use the two-wheeler loan EMI calculator to check affordability and apply right now!
Two-Wheeler Loan Eligibility
Lenders have certain eligibility criteria they expect you to fulfil before they process your application. These may vary from one lender to another. Some of the general eligibility criteria are as follows:
| Requirements | Salaried Individuals | Self-employed individuals |
| Age | Minimum – 21 years at the time of applicationMaximum – 65 to 70 years at the end of the loan tenure | Minimum – 21 years at the time of applicationMaximum – 65 to 70 years at the end of the loan tenure |
| Monthly income | Rs.7,000 | Rs.6,000 |
| Credit score | Above 750 | Above 750 |
| Loan amount | Up to 100% of the value of the vehicle | Up to 100% of the value of the vehicle |
| Residential stability | Must be staying at the current address for at least 1 year | Must be staying at the current address for at least 1 year |
| Work experience | At least 1 year | At least 1 year |
Note: These criteria may be different for different lenders. Check with the lender of your choice before applying.
Documents Required for Two-wheeler Loans
Every lender requires you to submit certain documents while applying for a loan. Some of the general documents required are given below:
| Particulars | Salaried Individuals | Self-employed individuals |
| Identity Proof | PAN card, voter’s ID, passport, driving license | PAN card, voter’s ID, passport, driving license |
| Address Proof | Utility bills, passport, etc. | Utility bills, passport, etc. |
| Income Proof | Salary slips, IT returns, bank statements | Bank statements, IT returns, audited financial statements |
Note: The documents required may differ from one lender to another. Check with your lender for what they require you to submit.
What are the Advantages of Taking a Two-Wheeler Loan?
Applying for a loan to buy the bike you have always wanted can benefit you in a number of ways. Some of them include:
- Get the funds you need to buy the bike you want.
- Use a guarantor or co-applicant to get the money you need.
- Get funds to buy superbikes as well.
- Get affordable interest rates.
- Enjoy a wide spectrum of loan repayment periods.
- Repay your loan in affordable EMIs.
- Pay every EMI on time and build your credit history.
Use BankBazaar’s Two-Wheeler EMI Calculator to Know Your EMI
BankBazaar brings you a unique EMI calculator to help you find out exactly what your EMI will be. The tool helps you find out how much you have to repay every month in just a few minutes.
The steps of how to use this tool are given below:
- All you need to do is to input the amount you want to borrow, select the interest rate charged by the lender, and the tenure of the loan.
- You can also select whether or not you intend to prepay parts of your loan. Also, you can type in any processing fees that you have to pay.
- After this, simply hit ‘Calculate’. Your EMI will be shown in a few seconds. You will also get the amortisation table for your loan. This table will show you how you have to repay the loan over the tenure you have chosen.
- The table will show you the interest and principal components of each EMI along with how much interest you will pay over the loan period. This helps you find out how much the loan will cost you.
Tips for a Successful Two-wheeler Loan Application
A few loan applicants have had their applications rejected by lenders. This is not a pleasant feeling and it is not good for your credit score.
We have put together a list of tips that can help you apply successfully for a two-wheeler loan. These are as follows:
- Determine the Exact Loan Amount: You should assess your needs and calculate exactly how much money you need to buy the bike you want. You should never apply for an amount larger than what you need.
- Check your Eligibility and Compare your Options: Once you decide how much money you need to borrow, take a look at all the loan options that you are eligible for. This is important. Never apply for a loan you don’t qualify for. This will automatically get your application rejected. Check your eligibility for a two-wheeler loan and make sure you fulfil all the criteria.
- Check your Credit Score: Your credit score is one of the most important factors that determine loan approval. Lenders usually reject applications with low credit ratings. So, if your credit history is poor, look at improving it before applying for the loan.
- Get a Guarantor or Co-Applicant: If your credit score is not up to the requirement of the lender, see if you can get a guarantor or co-applicant. Having a guarantor or co-applicant who has good credit can help you get the loan you want.
- Fill your Loan Application Properly: Make sure your application is fully filled with all the details your lender requires. An incomplete application or an application that has wrong information may be rejected.
- Submit all the Necessary Documents: While submitting your loan application, make sure you submit all the documents the lender requires as well. If you don’t submit the required papers, your application may be rejected.
- Try Applying with your Existing Lender: If you already have a good existing relationship with a bank, try taking the loan from them. This good standing may help you get a loan even if you don’t fulfil all their criteria.
Points to Remember While Applying for a Two-wheeler Loan
Now that you know how you can successfully apply for a motorbike loan, let’s check out what you need to keep in mind while applying for one. These points can help you find the right loan and avoid paying more than you should.
- Do your research well: This is the first step before you apply for a motorbike loan. Make sure you do your research well. Compare all the options that various lenders offer you. Compare interest rates, processing fees, repayment options, and other loan terms. This will help you find the best and cheapest option.
- Choose your tenure wisely: The tenure of your loan will determine how much you have to repay each month. Make sure you can afford your EMI. This means you have to be wise about choosing your tenure. A shorter tenure will help repay the loan faster. But your EMIs will be high. So, choose according to how much you can afford to pay off every month without facing a financial crunch.
- Choose an affordable interest rate: Your interest rate determines the overall cost of your loan. It also has an impact on your EMI. Choosing a loan with a low rate of interest can help keep your EMIs low. It will also make your loan cheaper.
Compare floating rates versus fixed interest rates: Some lenders may offer you both floating interest rates as well as fixed interest rates. Floating rates change as per the changes in the market rates.
Fixed rates remain constant irrespective of market rate changes. That said, floating rates are usually lower than fixed rates.
- Compute your EMIs before applying: When you compare your loan options, make sure you compare the respective EMIs as well. Choose a loan that gives you an affordable EMI with a convenient repayment period.
- Ask about prepayment fees: If you plan on prepaying or foreclosing your two-wheeler loan at any point, find out the charges for the same. Some lenders may charge you a fee for this while others may not. Prepaying your loan can help you save interest costs.
- Read the terms and conditions properly: This is also called the fine print. Read your loan offer document thoroughly and go through every single term and condition before you sign it.
The fine print may reveal hidden charges and fees that may otherwise never be mentioned. Knowing these terms can help you avoid paying heavy penalties.
Dos and Don’ts of Applying for a Two-wheeler Loan
Let’s now look at the dos and don’ts of applying for this loan.
| Do’s | Don’ts |
| Do your research well before you apply | Don’t apply for multiple loans at the same time |
| Make sure you are eligible for the loan you are applying for | Don’t apply for a loan simply because you get an attractive welcome gift |
| Compare interest rates and find the best option | Don’t forget to fill in the application form properly |
| Compare processing fees and other charges | Don’t sign the loan documents without reading them thoroughly |
| Evaluate your credit score before you apply | Don’t choose an EMI you cannot afford |
| Submit all the required documents without fail | Don’t forget to pay your EMIs on time |
| Read the offer document carefully before signing it | Don’t forget to prepay your loan if you can |
How to Improve your Chances of Getting a Two-wheeler Loan?
In this section, we are going to take a look at how you can improve your chances of getting your loan approved. The loan requirements differ from one lender to another.
Sometimes, you may find it hard to get the loan you are looking for. The following suggestions may help:
- Clean up your credit: Lenders pay a lot of attention to your credit score when evaluating your loan application. If you have a high score, you stand a better chance of getting the loan you want. You should check your credit report every now and then to see if you are making any errors. Taking corrective steps will help you clean up your credit.
- Balance your debt-to-income ratio: Your debt-to-income ratio compares your current debt situation to your current income. It shows how much of your monthly income is currently being used to pay off loans and bills. The lower this ratio is, the better your chances of getting your loan are. So, look at paying off a few loans before applying.
- Get Co-Signers if Needed: Sometimes, getting a co-applicant for your loan can help you get what you are looking for. This helps especially if you have a poor credit score. You can also get another individual to guarantee the loan on your behalf. Keep in mind that the co-applicant and the guarantor will be held accountable if you don’t repay the loan on time.
- Don’t apply for multiple loans: When you apply for multiple loans simultaneously, lenders will realise that you may not take the loan they offer. This will make them reject your application. Keep in mind that multiple rejections can hurt your credit rating.