Owning a bike is a dream of many. Along with increasing mobility, it saves a lot of your time. No matter how busy the road is, you can always see a line of two-wheelers just moving ahead quickly from the left side of the road. Thus, it is conveniently essential to own a two-wheeler to commute faster. – Loan Approvals
However, financial crunches or lack of immediate funds becomes a hurdle in our way to dreams. When finance is the problem, the loan is the easiest solution. This blog will help you understand how loan approvals work for two-wheelers. But, before entering into the “how” of the process, let’s first acknowledge the “why”.
Why may you require a two-wheeler loan?
- Even if you have enough funds, you should still go for a two-wheeler loan to build your credit profile. Anyone may require finance at any point in time. Thus, having a credit profile ready will help you at times of need.
- Since finance won’t be a constraint anymore, you can book a two-wheeler of your choice. Two-wheeler loan interest rates depend on your creditworthiness.
- You can budget your future expenses more easily since 100% cash outflow is saved. With a low amount of down payment, you can own the bike.
- Many lenders offer 100% finance, where the banker finances the total amount without any down payment. That’s where credit profile building is necessary.
How do the loan approvals work for two-wheelers?
Eligibility Check:
The first and the most basic check is about your eligibility to apply. Eligibility depends on three essential factors, namely your age, monthly disposable income and your credit score. You should be at least 21 years and be less than 60 years. The monthly income should be at least 15000 per month. More or less, it depends on each banker. Lastly, the credit score should be 750 or above. If your credit score is terrible, it’s better to wait, make it right, and then apply.
Loan Tenure:
The essential tenure of a two-wheeler loan ranges from 12 months to 36 months. Higher tenure implies lower EMI but increased interest cost.
Interest Rate:
Two-wheeler loan interest rates vary from 7% to 21% per annum, depending on numerous factors. Even interest rates can be negotiated if you have a good credit history.
Down Payment:
This is the margin money you may choose to pay. Higher margin money helps you reduce your EMI burden. So, decide your down payment as per your repaying capacity.
EMIs:
From your monthly income, deduct your committed expenses. The amount you have now is the disposable income. Considering the disposable income, decide the amount of cash outflow you can manage. Use a two wheeler loan EMI calculator to help you decide.
Bank Charge:
It would help if you inquired about this well before applying for the two-wheeler loan. Generally, processing charges cover stamp duty charges, documentation charges and loan processing charges. It differs from banker to banker. If you wish to repay the loan earlier than the due date, the lender may charge foreclosure charges.
Hypothecation:
The lender of the two-wheeler loan will ask for hypothecation of the vehicle unless the loan is repaid in its entirety. The registration certificate should mention the fact of hypothecation. RC documents need to be submitted to the lender.
Conclusion:
Youngsters with higher disposable income are mainly likely to obtain the loan. However, other factors such as years of establishment, business acumen, and product popularity play a key role for people above 30 years – everything drills down to tenure of loan, interest rate, down payment and your creditworthiness, of course. Consider checking the two-wheeler loan EMI calculator to check your repaying capacity.
