In India, most people use two wheelers, comprising motorcycles and scooters, for daily commuting. They are easier to handle in congested streets, cost-effective, fuel-efficient and most importantly, affordable. Most buyers find it quite difficult to afford the total cost of these vehicles. Now, that is where two wheeler loans play their role. They provide financing so that a customer can buy their desired two wheeler without having to pay the full cost at once. In this guide, we will take you through everything you need to know about two wheeler loans, from eligibility to application steps.
What is a Two Wheeler Loan?
A two wheeler loan is a kind of loan which allows an individual to purchase a bike or scooter. With these loans, one can buy a bike, even if they don’t have sufficient funds to cover the bike’s total cost. Instead of paying the entire cost upfront, the loan amount is paid back in monthly instalments, also known as Equated Monthly Instalments (EMIs), over a specified period.
Features of Two Wheeler Loans
Two wheeler loans have a few features that make them favourable for the borrowing population. These include the following key features:
- Interest Rates: A two wheeler loan would cost the borrowers much less than a personal loan.
- Repayment Period: Based on the individual’s financial flexibility, the period can be extended.
- Adequate Funding: Most lenders offer up to 95% of the on-road price of the vehicle, which means less down payment.
- Minimal Documentation: The application process is very simple and only requires basic documents such as Aadhaar, PAN card, voter ID, and driving license.
- Secured Loan: The loan is secured against the vehicle, and the lender can repossess it if the borrower fails to repay.
Two Wheeler Loan Eligibility
You can apply for a two wheeler loan if you meet the two wheeler loan eligibility criteria. Though the requirements may differ from lender to lender, here are the general conditions that most lenders have set.
- Nationality: You must be an Indian citizen to get a two wheeler loan.
- Age: The applicant must be at least 18 years old. The upper age limit is usually 59 years, though this may vary by lender.
- Employment: Two wheeler loans are offered to salaried persons as well as to self-employed customers. The financier, however, would analyse the source of income of the customer to check on his re-payment capability.
- Income documents: Normally, the bank and other financiers require income documents like salary slips or bank statements as proof of the customer’s repayment capacity for the loan.
It is always advisable to check specific eligibility criteria with your chosen lender since the policies may vary.
What to Consider Before Applying for Two Wheeler Loans
Before applying for a two wheeler loan, it is essential to consider the following factors to arrive at an informed decision.
- Credit Score: With a proper credit score, you can get better loan deals, including even lower interest rates.
- EMI Management: To manage your monthly repayments you may use an EMI calculator for estimating monthly payments based on the loan amount, interest rate, and tenure.
- Loan Amount: Decide the loan amount with your down payment capacity and based on the vehicle’s on-road price.
- Additional Fees: The following are additional charges that could increase the loan amount: processing charges, prepayment fees, late payment penalties, etc.
- Repayment Schedule: Analyse the repayment schedule, with the EMI amount and due dates.
- Loan Tenure: The tenure should be selected according to your financial capability, keeping in mind the long-term interest cost.
How to Apply for a Two Wheeler Loan
Applying for a two wheeler loan is a straightforward process and can be completed by following a few simple steps. Here’s how you can apply.
- Research Lenders: Begin by comparing two wheeler loan offers from various lenders, such as banks or non-banking financial companies (NBFCs). Look at interest rates, loan tenure, and additional charges to find a suitable option.
- Check Eligibility: Before applying, ensure that you meet the eligibility criteria set by the lender. This typically includes factors such as age, income, and employment status.
- Submit Application: Once you have selected a lender, visit their website or branch to apply for the loan. Complete the application form with your details, including your name, contact information, income, and employment status.
- Provide Documentation: Submit the required documents such as identity proof (Aadhaar card, PAN card), address proof (utility bills, rental agreement), income proof (salary slips, bank statements), and photographs.
- Loan Processing and Approval: The lender will process your application and verify the documents. Upon approval, you will receive the loan amount, which may be disbursed either directly to you or the vehicle dealer.
By following these steps, you can efficiently apply for a two wheeler loan.
Conclusion
A two wheeler loan provides a convenient financing option for individuals looking to purchase a motorcycle or scooter without the burden of paying the full cost upfront. With features such as competitive interest rates, flexible repayment terms, and minimal documentation requirements, these loans offer an accessible solution for many borrowers. However, it is essential to carefully evaluate factors such as credit score, loan amount, additional fees, and repayment schedules before applying. By understanding the eligibility criteria and planning the repayment process, borrowers can make informed decisions and manage their finances effectively while securing their desired vehicle.