Should You Finance Your Two-Wheeler? Know Complete Details

Two-wheelers are a compact, easy and fuel-efficient transportation mode compared to four-wheelers. That’s why people of almost age groups prefer riding a scooter or a bike. The cost of two-wheelers can range from a few thousand rupees to lakhs.   

 

While most can make a down payment, many prefer two-wheeler finance. That’s where a two-wheeler loan comes into the picture, allowing you to fulfil your mobility needs without burdening your budget. You can choose this smart option and enjoy the benefits of owning a two-wheeler.

 

What is a two-wheeler loan?

A two-wheeler loan is secured funding banks and financial institutions offer to help you buy a scooter or bike on EMIs – equated monthly instalments. You can get the desired amount at affordable interest rates and flexible repayment tenures based on your creditworthiness.

 

Why should you finance your two-wheeler? 

When you finance your two-wheeler with a loan, you get the freedom to repay the cost in EMIs without disturbing your savings. It helps you manage your budget better and live a stress-free life. Here are some reasons to finance two wheeler purchase.

 

1. Freedom to Choose: Get the Bike You Want

With a two-wheeler loan, you can buy the bike or scooter that matches your preferences and needs without settling for a less desirable option due to financial constraints.

2. Manage Your Budget: Keep Monthly Expenses in Check

Instead of paying a large sum upfront, a bike loan lets you spread the cost over affordable monthly instalments, easing the strain on your monthly budget.

3. Save Money: Affordable Interest Rates

The interest rates are always affordable compared to other loans, which helps you save money in the long run and makes your purchase more cost-effective.

4. Simple Application: Easy and Convenient

The application process for a bike loan is hassle-free in both offline and online modes. The application is straightforward, and you can even get instant loan approval.

5. Comprehensive Coverage: Bike Insurance Included

Many banks and financial institutions offer the option to combine bike loans with insurance, ensuring you have full coverage from the beginning for protection against unexpected events like theft or accidents. 

6. Tax Benefits: Reduce Your Tax Liability

Self-employed professionals and entrepreneurs can avail of tax benefits on the interest paid on a two-wheeler loan under Section 80C of the IT Act with a maximum of Rs 1.5 lakh per financial year.

7. Quick Approval: Instant Loan Decision

The two-wheeler loan often gets instant approvals, unlike other loans that can take days or weeks to process. It allows you to get your dream new bike sooner.

8. Build Saving Habits: Allocate Your Savings

By opting for a two-wheeler loan, you can use your savings for other crucial purposes, encouraging a habit of saving and ensuring financial stability.

9. Expand Your Purchasing Power: Own a Two-Wheeler Without Sacrificing

Financing your two-wheeler empowers you to own a bike without depleting your savings or compromising your daily expenses, increasing your purchasing power.

 

What are the eligibility requirements for a two-wheeler loan?

 You will need to fulfil the following eligibility requirements for a two-wheeler loan:

 

1. Age: You should fall within the specified age range, typically between 21 to 65 years, to be eligible for a two-wheeler loan.

2. Employment Status: Banks and financial institutions usually require you to be either a salaried individual or self-employed, with a consistent source of income.

3. Income: Your income should meet the minimum threshold required by banks and financial institutions. The specific amount may vary based on the loan amount and institution.

4. Credit Score: A credit score of 750 enhances your chances of loan approval. A higher credit score reflects responsible financial behaviour and shows you can handle debt responsibly.

5. Documentation: You should submit the required documents for loan approval, such as proof of identity, proof of address, proof of income, and any additional documents specified by the banks and financial institutions.

 

What are the document requirements for a two-wheeler loan?

 The document requirements may vary among banks and financial institutions, while the documents required for a two-wheeler loan application are as follows:

 

1. Identity Proof: You may be asked to provide identity documents such as an Aadhaar card, PAN card, passport, or driving license to verify your identity. 

2. Address Proof: Banks and financial institutions require address-proof documents like utility bills, rental agreements, or ration cards to confirm your residential address.

3. Income Proof: You should submit income proof documents such as salary slips, bank statements, or income tax returns.

4. Employment Proof: If you are a salaried individual, you may need to provide employment proof like an offer letter, appointment letter, or business registration documents if you are self-employed. These documents establish your employment status. 

5. Additional Documents: You may be asked to provide additional documents specific to a bank’s requirements. It is important to enquire about any additional paperwork needed for your two-wheeler loan application.

 

What are the tips for a successful two-wheeler loan application?

You can consider the following tips to increase your chances of getting approved for a two-wheeler loan:

 

1. Determine the Loan Amount: Know How Much You Need

Assess your budget and determine the exact loan amount required for purchasing your two-wheeler. Avoid borrowing more than necessary to ensure smooth repayment.

 

2. Check Eligibility and Compare Options: Explore Different Lenders

Evaluate your eligibility criteria and compare loan options from various banks and financial institutions. It allows you to choose the most suitable terms and favourable interest rates.

 

3. Check Your Credit Score: Understand Your Creditworthiness

You should check your credit score before applying for a loan. If it is low, you can take measures to improve it before submitting your application to increase the chances of approval.

 

4. Get a Guarantor or Co-Applicant: Strengthen Your Application

You can have a guarantor or a co-applicant with a good credit history which can improve the likelihood of loan approval if your creditworthiness is weak.

 

5. Fill out Your Application Properly: Provide Accurate Information

Fill out your loan application accurately and ensure it is complete. Mistakes or missing details can lead to delays or rejection of your application.

 

6. Submit All Required Documents: Prepare and Organise Your Paperwork

Gather all the necessary documents in advance and submit them along with your loan application. Missing documents can cause unnecessary delays in loan processing.

 

7. Consider Your Existing Bank: Explore Familiar Options

You should apply for a two-wheeler loan with your current bank if you have a good relationship with them, as they may offer better terms and conditions due to your existing relationship.

 

Wrapping up

Financing your two-wheeler through a loan can be a wise decision, offering numerous advantages such as flexibility in vehicle selection, affordable interest rates, instant loan approval, and flexible repayment tenures with affordable EMIs on Bikes. However, choosing a reliable and established bank to apply for a two-wheeler loan is crucial to get these advantages.  

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