Two-wheelers have numerous advantages, including fuel economy, cost-efficiency with lower maintenance costs than four-wheelers, and a more compact design resolving parking issues and traffic congestion. Two-wheelers make it easy to commute in day-to-day life. It reduces reliance on public transport and shortens travel time.
In this emerging trend of owning two-wheelers, particularly among the middle-class population, coupled with a rise in the working women population, financial institutions and NBFCs (non-banking financial companies) offer affordable two-wheeler loans to meet such escalating demand.
Crucial Aspects to Consider for Two-wheeler Loans
You can consider the following aspects while applying for a two wheeler loan:
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Eligibility Criteria
The lender can approve or disapprove a loan application based on your eligibility. So, checking if you are eligible for a two-wheeler loan is important. Common eligibility criteria for online bike loans with most lending institutions are as follows:
- The age limit is 18-65 years.
- Self-employed, salaried individuals and entrepreneurs can apply for an online two-wheeler loan.
- Salaried employees should have work experience of one year in a company. A self-employed individual needs to submit ITRs (income tax returns).
- The applicant should have resided at the same address for at least one year.
These are easy-to-meet two-wheeler loan eligibility parameters.
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Credit Score
It is assigned by credit bureaus based on an individual’s financial health. You should have a good CIBIL score. It is an important factor for lending institutions as they need to know whether lending funds to a borrower is safe or if there is any default risk. More than 700 is a good score and is preferred by most lenders to approve a loan application. Primarily, the credit score is calculated based on the following factors:
- The total number of loans an applicant has taken in the past.
- The total of all loan amounts taken earlier.
- Whether a borrower has made timely EMIs (Equated Monthly Instalments) in the past.
- Missed or delayed EMIs, if any.
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Documentation
The documentation process for compact mobility credit solutions is easy with lending institutions as they process a loan application digitally. Everything is digital in this era of technological emergence, from accessing a loan application to loan approval. Lenders need the following documents supporting a two-wheeler loan application:
- Identity Proof – PAN/Voter’s ID card/passport/driving licence
- Address Proof – Utility Bills/Passport/Rent agreement
- Age proof
- Passport size photo
- Salary slips for the past three months
- Form 16
- Latest ITR acknowledgement copy
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Loan Amount
Borrowers should know that the loan amount is one of the most crucial factors the lender considers deciding on the two-wheeler loan interest rates. A high loan amount means higher risk for the lender, so the interest rates may be slightly higher. Although interest rates are subject to your two wheeler loan eligibility, you can still apply for a lower loan amount and a shorter tenure to save on interest costs.
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Loan Tenure
Loan tenure for a two-wheeler loan is offered for 12-36 months by renowned NBFCs like Fullerton India. If you consider a longer tenure to lessen the loan EMIs, you should know that the longer the loan tenure, the higher the interest rate. Because if you take a longer time to repay the loan, it will increase the risk of default associated with a loan for the lender. It is good to consider a shorter tenure for a two-wheeler loan. A two-wheeler loan EMI calculator can help determine how much you will need to pay during the loan tenure.
The Option for Zero Down Payment
A down payment is an upfront amount you pay before buying a two-wheeler against a loan. Many individuals may not have adequate funds to pay a down payment. There are reputed NBFCs offering two-wheeler loans with zero down payment options. You can make use of such beneficial financing options. It is a considerable facility offered by renowned lenders to their customers. So, considering these important aspects, you can get the best financing option to buy a two-wheeler.
