With the financial instability induced by the recent pandemic and the social distancing norms, two-wheelers have become a popular choice among Indian consumers. The reasons can be attributed to the fact that they are inexpensive and can offer freedom from the public conveyance.
However, most people have seen a reduction in their income due to the recent economic recession. Therefore, applying for an online bike loan seems to be the best option to manage their finances.
Here are the top facts to consider before taking a two-wheeler loan:
Some lenders offer up to 100% of the bike’s on-road price as a loan. However, while applying for an online loan, you should only get as much as you need, as applying for a higher loan amount will only lead to a higher interest rate. You can use an online bike loan EMI calculator to determine your affordability.
When you buy a bike on EMI, your lender decides an interest for you based on factors like your income and your repayment capacity. So, while applying for an online bike loan, make sure you have a stable income and have sought a lower loan amount to get a lower interest rate.
Your credit score plays a vital role in your online bike loan application. As a rule of thumb, the closer your credit score to the range of 900, the better your chances of securing a loan with a lower interest rate. So, check your credit profile before applying for an online bike loan and make sure to meet your lender’s requirements.
Type of loan
When you buy a bike on EMI, your lender may offer you two types of loans – secured and unsecured loans. A secured loan is where you need to pledge your asset as collateral, whereas unsecured loans do not have such requirements. Generally, unsecured loans come with a higher interest rate. So, If you can pledge your asset as collateral, you may enjoy better benefits.
The best part about an online bike loan is that you can get a repayment tenure for up to 48 months, giving you the flexibility to repay the loan amount within stipulated EMIs. However, a higher loan tenure will only translate to a higher interest rate. So, if you have the budget, you should opt for a shorter loan tenure and reduce the financial burden.
When you buy a bike on EMI, you will need to furnish documents required by your lender. Although the documents required may vary across lenders, they are mostly the same.
The requisite documents to apply for an online bike loan are:
- Identification proof: Aadhaar Card, PAN Card, Voter ID Card, Passport.
- Address proof: Aadhaar Card, PAN Card, Voter ID Card, Passport, or utility bill.
- Income proof: Bank statement, salary slip, ITR, or form 16.
- Cancelled cheque and a passport size photo
Getting a two wheeler vehicle loan is easy and convenient due to the relaxed norms of eligibility. Before submitting your application, you will have to ensure that you meet the eligibility criteria. The requirements that are common across all platforms are:
- You must be an Indian citizen currently working as an employee of an organization or a self-employed professional.
- You must be at least 18 years at the time of application and 65 years during the loan maturity.
- As a salaried person, you must earn a minimum net income as per your lender’s policy.
- As a self-employed individual, you must show a minimum net profit as per your lender’s policy.
Besides the interest, you will also need to pay a processing fee while applying for a two-wheeler loan. The processing fee varies across lenders. However, it should cost you between 1% to 3% of the total loan amount. Furthermore, the festive seasons bring down the processing fees as a discount. If you can wait for the right season, you can avail of additional benefits.
Equated monthly installments (EMIs)
Your preferred EMI is the most crucial fact in your online bike loan application. It would be wise to determine your EMI before you buy a bike on EMI, as it enables you to manage your finances and repay the loan amount without any delay. Also, you can use a bike loan EMI calculator to calculate a suitable EMI based on your needs and preferences.
With affordable interest rates and flexible repayment tenure, you can easily repay the loan amount without putting any burden on your monthly budget.