An ultimate guide to applying a two wheeler loan online

In today's day and age, owning a two-wheeler is more of a necessity, rather than a luxury. However, purchasing a new bike or scooter that meets your unique requirements isn't always possible. Thus, if you don't always have the funds to pay for your two-wheeler upfront, you can choose to opt for a two wheeler loan.

A two-wheeler loan is a secured loan that you can avail of easily at the time of purchasing a bike or scooter. Read on to know everything that you must know about bike loans and what you need to consider when availing of this loan.

What is a Bike Loan?
A two-wheeler or a bike loan is secured against the value of the new bike that you purchase. You can repay this loan through simple Equated Monthly Instalments (EMIs). Most lenders offer a hassle-free process of availing a bike loan, and you can get it even while purchasing the bike. In addition to this, bike loan interest rates are generally lower, since these are secured loans. However, you must check the latest bike loan interest rate by different lenders so that you get a bike loan at the lowest possible rate.

Once you repay your bike loan completely, the ownership rights of the bike are transferred to you. However, if you fail to repay the loan, the lender will recover the loan amount by selling off the bike.

What is the Bike Loan Interest Rate?
As mentioned above, the bike loan interest rates are generally lower compared to other unsecured loans. Considering that the tenure usually goes up to four years, paying a rate lower than 10% helps in keeping the total cost in check.

Bike Loan Eligibility Criteria
Bike loans are generally hassle-free and do not have complex eligibility criteria like home loans. While the eligibility criteria for availing of a bike loan vary for every lender, here are some of the basic requirements that you must fulfil:

• You must be an Indian resident between 18 to 65 years of age
• You must be employed for at least a year if you are a salaried employee
• You should have IT returns for the past two years if you are self-employed
• You must have a good credit score

Two-wheeler Loan Documentation
Most two-wheeler loans provide an online facility to avail of bike loans. Some lending companies also collaborate with automobile companies to provide you with instant credit to purchase your dream bike.

They require you to furnish minimal documentation in order to make the loan approval quicker and easier.

While the documentation needs may change depending on the choice of lender, here are some of the basic documents that you need to submit:

• Proof of your identity in the form of an Aadhaar card, PAN card, Voter ID card, Passport, Driving License, etc.
• Proof of your residence in the form of utility bills, Passport, Government Issued-documents, etc.
• Proof of your income, such as your latest salary slips, IT Returns, bank statements, audited financial statements, etc.

Things to Keep in Mind When Applying for a Bike Loan
Before deciding on which bike loan to choose, you must take into account certain considerations, which are as follows:

Amount of Bike Loan
A bike loan can cover the entire cost of your vehicle, including the registration charges. However, note that you will have to pay higher EMIs every month if your loan amount is higher.

So, it is advisable to apply for a loan amount as per your financial needs and your ability to repay it. Here, making a large down payment can be your best option.

Repayment Tenure
The repayment tenure is another significant component that you must consider before availing of a bike loan. While you pay lower EMIs every month, if you choose a longer repayment tenure, you will end up paying higher interest charges.

On the other hand, if you opt for a shorter tenure, your monthly outflow will be higher, but you can save on interest payments considerably. In most cases, the tenure goes up to four years, with some lenders offering a longer period.

Interest Rate
Interest rate defines the amount that you will pay in excess of the principal amount of your loan. Interest rates are usually expressed in percentage terms. You must go for a lender offering a low bike loan interest rate as it allows you to save on your total cost of borrowing.

Fees and Charges
Each lender charges a processing fee that may range between 0.50% and 2% of the loan amount. In addition to this, some lenders also charge foreclosure or part-payment fees in case you decide to make part-payment towards the loan or foreclose it.

It is advisable to assess these charges before you decide on your lender for the two-wheeler loan. Moreover, you must also check if the lender has levied any hidden charges.

In conclusion, you can avail of a bike loan if you do not have the required funds to pay the upfront cost of your dream bike. Since these loans are secured, bike loan interest rates are generally lower, making them a suitable lending option for many.

Note that many lenders offer attractive offers during the festive season, which include zero processing fees, lower interest rates, etc. So, if you are planning to purchase a two-wheeler with a bike loan, it is better to wait for the festive season for such lucrative offers.