If you are a travel enthusiast, then you must have already been enticed by the newly launched robust engine bikes in the market. However, understand that not everyone can afford to buy a new bike, opting for an online bike loan is the best choice to manage your finances. You can take your bike on beautiful terrains without worrying about shouldering the entire cost at once.
Further, two-wheelers are the best alternative to public transport due to the social distancing norms set in place, and there is no better personal transport than two-wheelers. You can use it to navigate through daily traffic or feed your adventure by hitting the road to the most beautiful terrains.
If it is your first time applying for an online bike loan, follow the underlying tips to avoid making mistakes and avail yourself of the best two-wheeler loan.
Also Read: Credit Score to Get Business Loan
Check Your Credit Score
Before applying for your first bike on loan, it is essential to check your credit score. It is imperative, especially when you lack the requisite score. A credit score indicates your creditworthiness and contains your payment behavior, and it is considered one of the main parameters by lenders before approving your loan application.
A well-maintained credit score will not only warrant approval, but you will also get a lower bike loan interest rate. To assess your credit score, you will need to visit the CIBIL web portal, create an account, fill in your details, and avail of your credit report for free. Some lenders have credit checks on their websites as well. You will need to check that with your lender.
Know the Eligibility Criteria
Another crucial thing you will need to consider before buying your first bike on loan is finding your lender’s eligibility requirements. Although the eligibility criteria depend upon the lender, there are a few standards that are common across all platforms. For instance:
- You must be an Indian citizen who is an employee of a private or public company, or you must be a self-employed individual.
- You must be at least 18 years old at the time of application and 65 years during the loan maturity.
- You must have a stable job with a minimum yearly income (based on the lender’s policy).
- You must show residential proof, and you must be residing in your declared address for a minimum of one year.
Prepare the Requisite Documents
You may find it boring to gather all the necessary documents, it is a crucial step in acquiring an online bike loan. Furnishing your document may speed up the loan disbursement. The documents required are:
- Duly filled and signed two-wheeler loan application form.
- Valid identity and age proof: Passport, Aadhaar Card, Voters ID Card, Driving License, or PAN Card.
- Valid residential proof: Passport, Aadhaar Card, Voter ID Card, Driving License, Telephone Bill, Electricity Bill, Ration Card, or LIC policy.
- Income proof: Income Tax Returns (ITR), Form 16, Salary slips, bank statement.
- Asset proof: Latest property tax receipt.
- Passport-size photographs
Compare Interest Rates
A 2 wheeler loan interest rate may vary from lender to lender. You may find lenders that offer bike loan interest rates starting from as low as 0.99%. Conduct research and gather at least five lenders and compare their interest rates before finalizing your option.
The interest rate that you will receive after submitting your loan application will depend upon several factors like your credit score, your bike’s model, your payment capacity, your current employer, and your lender’s policy.
Calculate Your EMI
Assess your needs before you apply for a loan amount. You should only borrow as much as you can afford to repay in EMIs. Your EMI payments should not be a burden on your monthly budget. You use your lender’s online bike loan EMI calculator and calculate an EMI based on your needs.
There are three components of an EMI calculator: the loan amount, 2 wheeler loan interest rates, the loan tenure. You can alter them as many times as you want until you reach an affordable EMI based on your needs.
Understanding Processing Fees and Foreclosure Charges
The monthly interest rate is not the only thing that you will have to pay attention to. You will also be charged an up front processing fee, which may be between 1% to 3% of the total loan amount. Furthermore, If you wish to foreclose your loan by prepaying the loan amount in full, you will need to pay a prepayment penalty. It is crucial to keep an eye on these before applying for a two-wheeler loan.