How Are Loan Applications for Two-wheelers Assessed and Approved in India

In India, owning a bike or scooter is more than just a mode of transportation, it’s a way of life. With the option to apply for Bike Loan online, getting your dream bike has become a lot easier. But before you can hit the road, you need to get your loan application approved. In this article, we’ll take a closer look at how loan applications for two-wheelers are assessed and approved in India, while also exploring the Bike EMI options.

Mastering the Art of Two-Wheeler Financing in India: 8 Key Factors to Keep in Mind

1. Eligibility Criteria 

The eligibility criteria for a bike loan vary from bank to bank, but some common factors include age, income, employment, and credit score. The bank considers these factors to assess your creditworthiness and ability to repay the loan.

• Age: You need to be at least 18 years old to apply for a bike loan. However, some banks may require you to be 21 years or older.

• Income: A stable source of income is necessary to repay the loan. Most banks require you to earn a minimum income of Rs 15,000 per month. The income requirement can vary based on the lender and the loan amount.

• Employment: You need to have a stable job or business with a minimum tenure of 6 months to a year. The employment tenure requirement can vary based on the bank and the loan amount.

• Credit Score: Your credit score is an essential factor in determining your creditworthiness. A good credit score improves your chances of getting a loan and getting a lower interest rate. A score of 750 or above is considered good.

2. Loan Amount and Tenure

The loan amount you are eligible for depends on the bank’s policies and your creditworthiness. You can get up to 100% of the two-wheeler’s on-road price as a loan. The on-road price includes the ex-showroom price, road tax, insurance, and registration charges.

The tenure of the loan can range from 12-48 months. The loan tenure affects the EMI amount, interest rate, and total interest payable. A longer tenure means a lower EMI amount but a higher interest cost, while a shorter tenure means a higher EMI amount but a lower interest cost.

3. Documentation

To apply for a bike loan, you need to submit some essential documents. These include:

• Identity proof: Aadhaar card, PAN card, passport, driving licence, or voter ID card. These documents verify your identity and citizenship.

• Address proof: Aadhaar card, utility bill, rental agreement, or passport. These documents verify your residential address.

• Income proof: Salary slips, bank statements, ITR, or Form 16. These documents verify your income and employment status.

• Two-wheeler documents: RC book, insurance, and invoice. These documents verify the ownership and value of the two-wheeler.

4. Processing and Approval 

Once you submit your application and documents, the bank will verify the details and process your application. The bank may also conduct a background check, credit check, and verification of the submitted documents. The processing time can vary depending on the lender..

If your application is approved, the bank will disburse the loan amount directly to the two-wheeler dealer or seller. The bank may charge a processing fee or other charges, which can vary based on the bank.

5. Bike EMI

The bike loan repayment is done through EMIs. The EMI amount depends on the loan amount, tenure, and interest rate.

You can use a bike EMI calculator to estimate your monthly EMI based on these factors. The EMI calculator is an online tool that helps you plan your loan repayment and budget your expenses.

6. Interest Rate

The interest rate is a crucial factor in deciding the cost of your loan. The interest rate for two-wheeler loans in India can vary depending on the bank policies.

The interest rate can vary based on the bank, loan amount, tenure, and your creditworthiness. 

It is advisable to compare the interest rates of different banks before applying for a loan. You can check the interest rates on the bank’s website or visit their branch.

7. Collateral and Security 

Bike loans are secured loans, which means the two-wheeler you purchase with the loan serves as collateral or security for the loan. The bank holds the ownership documents of the two-wheeler until you repay the loan fully.

If you default on the loan repayment, the bank can seize and sell the two-wheeler to recover the outstanding amount. It is important to ensure timely repayment to avoid any legal actions or damage to your credit score.

8. Prepayment and Foreclosure 

Prepayment is the option to repay the loan amount partially or fully before the end of the loan tenure. Foreclosure is the option to repay the loan fully before the end of the loan tenure.

Some banks may charge a prepayment penalty or foreclosure charges if you opt for these options. It is advisable to check the bank’s policy regarding prepayment and foreclosure before applying for a loan.

Conclusion 

In conclusion, when you apply for Bike Loan online, it involves various factors and requires careful consideration. With the digitalisation of the lending industry, applying for a loan online has become easier and more convenient. It is important to research and compare different banks and consider your repayment ability before applying for a loan. By selecting the right bank, you can ensure a smooth and stress-free loan process and enjoy your new two-wheeler without any financial worries.