Do you dream of buying the latest 200cc bike launched in the market but need more funds? Are you wondering how to pay its cost? Well, a loan for bike is a financial product you can borrow to buy a scooter or motorcycle. This loan option makes it easier to acquire your desired ride without paying its cost upfront. Moreover, the inconvenience of public transport makes bikes a necessity for daily commuters. Opting for a loan to fund your bike purchase can be a beneficial choice, yet several factors merit consideration before selecting the most suitable loan option. If you’re contemplating the purchase of your new bike through a loan but are uncertain about where to begin, here’s a guide highlighting the five crucial factors to ponder before initiating the application process for a Two-wheeler Loan.
1. Credit History
Checking your credit score before applying for a new loan is imperative, especially if it is not stellar. Most lending institutions expect a decent credit score to lend you the desired loan amount at a reasonable two-wheeler loan interest rate. Therefore, checking your credit score before applying for a loan online becomes even more important. Here are some keyl questions to answer about your credit before applying:
- How many loans you have borrowed in the past?
- Did you make your repayments on time?
- How many payments did you miss?
- How much did you borrow?
- Are there any outstanding balances?
Credit bureaus assign a credit score to each individual from 300 to 900. Loan seekers with a stellar credit history are likelier to qualify for loans easily. Visit the credit bureau’s website or use your lender’s platform to check your credit score.
2. Eligibility Check
Technologically advanced NBFCs allow you to apply for a loan for bike online from anywhere. However, you must check and fulfil the lender’s eligibility criteria before obtaining bike finance. Since these conditions vary between lenders, the higher your eligibility, the easier it is to get approval at the best interest rates. Here are a few general conditions you must fulfil:
- You should be an Indian citizen above 18 years of age.
- A motorcycle loan is accessible to both salaried employees & self-employed professionals.
- For salaried employees, a minimum of six months of Constant employment at the same company, with a work experience of at least 1 year. On the other side, Self-employed professionals should have been operating their current business for a minimum of one year.
- The maximum loan amount available is up to Rs 3.5 Lakh.
- The maximum loan tenure you can choose is 60 months.
- Your monthly income should be at least Rs 8,000.
Avoid applying for a loan that you do not eligible for. Otherwise, the lender will reject your loan application for a trivial reason, unnecessarily affecting your credit score.
3. Loan Amount to Borrow
Generally, lending institutions provide loans as per their policies and standards. However, the loan amount you borrow largely depends on the price of the bike you want to purchase. Although loan companies like Hero FinCorp finance up to 95% of the bike’s cost, it’s not wise for you to borrow all that is available. It unnecessarily increases your loan burden and makes the motorcycle costlier than its actual price. Therefore, evaluate your finances and borrow only what you need and can repay easily.
4. Loan Process
Now, you can apply for a loan for bike online. Modern NBFCs make the entire process straightforward and hassle-free if you are eligible for a loan. Therefore, you must navigate the loan company’s application page, fill out an online form, and provide your personal and financial information. Further, you must also enter details about the vehicle, such as the dealer’s name, on-road price, RTO location, etc. Moreover, provide a few documents required for the application, including the following:
- Application form
- Passport-sized coloured photograph
- Identity proof, like driving license, Aadhaar card, passport, PAN card, or a government-issued ID card
- Address proof, like driving license, Aadhaar card, passport, municipal tax receipt, property tax receipt, ration card, or utility bill
- Income proof, like the last six months’ salary slips and bank account statements, salary certificate, or Form 16
- Job continuity proof, like a job offer letter or experience certificate
- Age proof, like birth certificate, PAN card, passport, or driving license
Self-employed individuals must provide the following documents along with their identity and address proof:
- Office address proof, like utility bills, maintenance bills, property documents, rent agreements, or SSI or MSME Registration Certificate
- Business existence proof, like shop establishment proof, copy of tax registration, or company registration certificate
- Income proof, like recent ITR or last six months’ bank statement
After providing the required documents, you may get your loan approval instantly and disbursal within a few hours.
5. Loan Tenure
Since lending institutions offer flexible repayment terms, you must choose a loan term with budget-friendly EMIs. The tenure you select largely affects your monthly obligations. Additionally, the amount you borrow and the two wheeler loan interest rate affect your EMIs. A bike loan EMI calculator helps calculate the EMIs based on these three crucial parameters.
Opting for a longer tenure reduces the EMI amount but increases the interest outgo. Conversely, a shorter term increases the EMI amount but reduces your loan interest cost. For instance, if you borrow a bike loan of Rs 1 Lakh at 12%, your EMIs for 12 months will be Rs 9,333, and your total payable amount will be Rs 1,11,996. However, the same loan scheme for 48 months will reduce your EMIs to Rs 3,083 per month but increase the total payable amount to Rs 1,47,984. Thus, pick a loan tenure carefully, keeping your monthly budget in mind.
Applying for a loan for bike requires careful consideration of various factors, including your credit history, repayment tenure, interest rate, monthly budget, financial situation, etc. Therefore, evaluating these factors and choosing a loan plan that fits your budget is crucial to avoid financial stress. By keeping these things in mind and taking time to research, you can obtain a bike loan that helps you buy the bike you desire without disturbing your finances.