Two-wheelers are the most convenient form of commute made for Indian roads to navigate you easily through the traffic. Yet, it started gaining more popularity at the onset of the pandemic as the hysteria surrounding the subject of contracting the virus gave rise to a change in people’s preferences and a switch to personal mobility over public transportation.
Moreover, Sumit Chhazed, Co-founder, OTO says, “people who had kept a part of their income aside for purchasing a four-wheeler earlier have transitioned to buying a two-wheeler owing to the easy financing options made available by lenders and NBFCs to meet the overgrowing demand along with the aforementioned factors.”
Having said that, there are certain things every loan applicant should consider before applying for one as listed below;
- Interest rate – That percentage of the principal amount you are bound to pay along with the EMI. Chhazed says, “since there is a surge in demand for financing of two-wheelers, lenders NBFCs are competing against each other to offer reasonable rates. The rate may start from 7 per cent to 18 per cent depending on the tenure one chooses.”
- Principal amount – It is the actual amount you borrow from a lender and will depend upon the repayment capacity of the borrower. “The LTV ratio is considered by the lender for this matter. The ratio indicates the proportion of equity in the form of down payment against the debt, as the higher the ratio, the higher the risk for the lender,” explains Chhazed. An LTV of 80 per cent or under is considered good.
For instance, if you purchase a two-wheeler worth Rs 100,000 and your LTV is 80 per cent your loan amount will be Rs 80,000 and you are expected to pay 20 per cent, that is Rs 20,000 towards the down payment.
- Tenure – The amount of time offered to a borrower by any financial institution to repay the loan amount. It usually ranges from 12-48 months.
- EMI – EMI or Equated Monthly Installment is that part of the principal amount plus interest you pay every month.
5. Processing fee – A nominal fee charged for processing the loan. Note that some lenders or NBFCs may charge you zero processing fee.
Here are the tips to get your two-wheeler loan accepted in one go:
1. Fill in the correct details – The loan application starts with filling up details be it online or offline. Chhazed points out, “It may sound easy but a minute error can delay the entire process. So be careful while entering the details.”
2. Eligibility Criteria – This is the first and foremost step that you need to do to get your two-wheeler loan accepted promptly. Different lenders have different criteria to check the eligibility of the applicant.
Here are the commonly accepted eligibility requirements;
- Residence – You must have a stable residential address and should also be a citizen of India for a minimum period of 12 months.
- Age limit – An applicant must be at least 18 years of age at the time of applying for a loan and a maximum of 65 years at the time of loan maturity.
- CIBIL score – A good CIBIL score of 650+
- Employment status – Stable employment status or if you are self-employed, then IT Returns of your company must be furnished before the lender.
3. Documents in handy – To ensure a smooth KYC process, you must keep documents handy. These documents include ID and address proof for identity verification purposes, similarly salary slips, IT returns, and bank statements to substantiate your regular income.
4. Calculate EMI – If you meet the eligibility criteria, Chhazed points out, “then the next step should be to calculate the amount one must pay towards EMI every month. It can be accessed by EMI calculators online to estimate the EMI depending upon the tenure, principal amount, and the interest rate.”
Conclusion
Getting a two-wheeler loan is undoubtedly one of the best and easiest ways to fulfil your bike dreams without compromising your finances. However, the loan application process is something that most of the applicants say is time-consuming and stressful as you have to wait in a queue at banks for loan approval.
But, Chhazed adds, “that is a thing of the past as at present, NBFCs and lenders provide a completely digitized process ensuring a hassle-free process. Therefore, if one meets the aforementioned eligibility criteria, one can expect their two-wheeler loan to be accepted in one go.”
