Bike purchase can result in financial strain for individuals with limited income, thus leading to expenditure cuts. Thus, one may not always be up for bike purchase even though they desire to own one. A two wheeler loan does away with such financial constrain on may encounter when making a bike purchase, which is always a big-ticket expenditure, more so when the bikes are flagship models or modernised sporting vehicles.
A bike loan can also be useful for people looking forward to improve their financial managements while ensuring such purchases accommodate in their monthly expenses easily. A bike loan can be beneficial in several ways. When borrowing the advance, one must be informed of all the essential details related to the advance for improved management of funds, including timely repayment. Let’s check out some essential details related to the to ensure informed borrowing and maximised affordability.
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Important Things to Know About a Two Wheeler Loan
1. Secured financing
Bike loans are are secured advances that lenders provide against the hypothecation of your newly purchased bike. The loaning process entails obtaining bike allotment first through down payment and then using it as collateral for availing the remaining cost of the vehicle.
As these are secured finances, borrowers can also avail funding at affordable 2 wheeler loan interest rates, which makes it easy to repay the advance as well.
2. High creditworthiness is crucial
As bike loans are high-value advances and come with necessary repayment liability to be met as EMIs payable every month until the tenure’s end, lenders require applicants to hold high creditworthiness. As credit score is a crucial indicator of one’s creditworthiness, the applicant should hold a credit score of at least 700, even though it is not mentioned as an eligibility requirement.
3. Simple eligibility requirements
The must-meet eligibility criteria for availing a two wheeler loan are minimal and easy to meet. Whether a salaried or a self-employed individual, you must qualify within a certain age range as specified by the lender. Also, lenders state minimum income requirements based on the city and need applicants to be residing Indian citizens with a certain occupational stability.
4. Documentation reduced to minimal
When availing a bike loan, you also need to provide only a few documents to complete paperwork, mostly including KYC, income, and other financial documents. The steps involved in paperwork completion are swift and simple too, taking only a few minutes.
5. Easy online application
You can now apply for a bike loan online, a financial facility which most lenders to provide to ease loan accessibility for all. You only need to visit the official website and submit the filled up application form with necessary details entered accurately in the form.
6. Loan approval within a few minutes
Once you have applied for the loan, some of the best lenders provide approval for the advance within a few minutes only. You must hold high eligibility though, meeting all criteria required by the lender, to receive quick bike loan approval. The loan comes with swift disbursal of the approved amount to the bike seller as well, usually within 24 to 48 hours of approval.
7. Balance transfer facility available
Once an individual has availed a bike loan and seeks to reduce their loan liability through lower interest rates, they can avail a balance transfer facility as well. It allows you to transfer your outstanding loan balance to a new lender offering lower rates on the advance. The facility also comes with additional funding available in the form of top-up loans.
8. High LTV
As secured advances, bike loans are extended under the LTV-based system of lending. LTV or Loan to Value ratio is a percentage representation of the maximum loan value a lender can extend as against the market price of the bike. With bike loans, LTV can go as high as 95% if availing financing from a reputed lender.
9. Prepayment at low to no cost
Financial institutions also allow borrowers to prepay these loans at minimal costs levied as prepayment fees. A prepayment is a process that allows a borrower to repay the loan at any time before the tenure ends. It helps cut down on the repayment cost through interest reduction, and allows remarkable savings.
10. A long tenure for repayment
Two wheeler loans come with a long and extended tenure for repayment. It allows borrowers the flexibility to choose a suitable tenure to help keep the EMIs and the total repayment liability payable. When assessing the affordability of your two wheeler loan, use a dedicated EMI calculator, which should help you assess both short and long-term affordability of your loan. Financial institutions also provide financial tools like Foreclosure calculator and balance transfer calculator to help borrowers make suitable repayment decisions for optimised savings on their loans.