A two-wheeler adds mobility to your life. Plus, it’s economical to maintain.
If you are considering a bike purchase, the 2-wheeler loan is for you. Your current means might not allow for your dream bike if you prefer self-financing the purchase. Even if you have enough savings to finance the purchase, it’s never a good idea to exhaust your savings. Financial exigencies can surface anytime, and your savings hedge you against them. The bike loan gives you the desired funds to own your dream bike without eating into your savings.
Has this piqued your curiosity? If yes, then here’s what all you need to know about bike loans.
Eligibility:
First, you need to qualify for bike finance. Every lender requires you to fulfil certain parameters to ensure recovery. The eligibility criterion is different for different lenders but with a lot of overlap. Here’re a few qualification parameters:
You should be
- An Indian citizen
- Either self-employed or salaried
- 18 years of age when applying
- Below 65 years old before the loan term expires
- Earning at least INR 96,000 annually if salaried
- Earning INR 1,20,000 annually if self-employed
Documentation:
Documentation is an essential part of the scooter loan. Again, the documentation requirements are minimal and vary from lender to lender. Typically, the following documents are required:
- A recent passport size photograph
- ID Proof (Any one of the following): PAN Card, Passport, Aadhaar Card, Passport, Voter ID Card, Ration Card, LIC Policy
- Address Proof (Any one of the following): Ration card, Passport, Aadhaar card, Utility bill, Voter ID Card, LIC Policy
- Income Proof (Any one of the following): Previous 6 months Bank Statement, Previous two years’ Income Tax Returns, Salary Slips, Form 16
- Asset Proof: Original documents of any self-owned property
Types of loans:
The 2 wheeler loan is either secured or unsecured.
- Secured loan: If the lender asks you to pledge an asset before sanctioning the loan, it is a secured bike loan. The asset put up as collateral can be real estate or valuables. In most cases, the two-wheeler is the collateral. The lender has the legal rights on the bike until the loan is paid off in full but you can use it meanwhile. As the risk of default is covered in this arrangement, you get lower interest rates, and flexible terms and tenors.
- Unsecured loan: The lender might sanction the bike loan without asking you to put up anything as collateral. That’s an unsecured loan. The risk of default for the lender runs high, and hence, higher interest rates, harsher terms and tenors. You need a terrific credit history to avail an unsecured loan at reasonable interest rates.
Interest Rates:
The bike finance interest rates are lender-specific. Two lenders might not offer the same interest rates. Specifications may vary, but the bike loan interest rates range from 14.03 to 27.53%. Now, preferring a lender offering competitive interest rates makes sense. After all, you’ll like to limit your overall cost of borrowing and release stress of EMIs.
The bike loan interest rates are subject to a few factors, including, but not limited to:
- A CIBIL score below 750 attracts loan denials and higher interest rates
- Secured bike loans come with lower interest rates vis-à-vis unsecured loans
- A fully financed loan involves higher interest rates than those with down payments
- Applicants with a stable income can expect competitive interest rates and vice versa
- Longer loan tenures come with higher interest rates as opposed to shorter ones
Loan amount:
What’ll be the amount you’ll get? Well, that again depends on your lender. Most lenders cover 70 to 80% of the bike’s on-road price. However, NBFCs like Muthoot Fincorp cover up to 100% on-road price of the bike, allowing you to keep your savings intact.
Tenors:
The scooter loan can be repaid within 12 and 48 months, depending on your loan amount, loan type and lender. Muthoot Fincorp can create a customized repayment schedule to your needs.
Approvals:
The bile loan represents easy loaning. Feel free to apply online at Muthoot Fincorp. The representatives will reach out to you at the earliest at your home or office. They’ll assist you with paperwork and collect all required documents from your premises. The approval takes two days max. The loan amount will be disbursed in your account directly.