Dos and Don’Ts While Applying for a Two-Wheeler Loan in India

Two-wheelers are the easiest modes of transportation on India’s busy roads. If you want to buy a bike but fell short of funds, a two-wheeler loan can finance your purchase with easy terms and conditions. Many lenders offer 100% of the bike’s price with easy eligibility conditions, flexible repayment terms, and minimal documentation requirements. However, borrowers must follow certain do's and don'ts while applying for a bike loan. In this post, we will throw a light on them.

Do’s:

Here is a checklist of what you should do while applying for a bike loan:

Compare Lenders: While looking for a two-wheeler loan, you will find hundreds of lenders waiting to fund your bike purchase. However, before finalizing your loan application, compare different lenders and make an informed choice. Compare lenders based on their loan amount, interest rates, repayment terms, and additional fees and charges and select the one offering the best loan deal. 

Check Eligibility: Although most lenders have simple eligibility conditions, you must check them before applying for a loan and ensure that they match your profile. If you do not fulfil the lender’s minimum income, age, or employment requirements, they will reject your loan application that reduces your credit score.

Use an EMI Calculator: Most lenders offer flexible repayment terms on their two wheeler loans. Borrowers must use a two wheeler loan EMI calculator to opt for a repayment tenure suitable to their repayment capacity. Longer tenure results in smaller EMIs, while shorter tenure results in bigger EMIs. However, interest outgo is higher in the long term while smaller in the short term. Therefore, an EMI calculator helps you choose the correct loan term with EMIs adjustable in your budget.

Improve Credit Score: The lenders check your credit score while scrutinizing your loan application. A credit score higher than 700 represents consistent repayment history and responsible credit behavior. Lenders determine your loan amount and interest rate based on your credit score. However, if you have a low credit score, take steps to improve it before applying for a bike loan. Applying for a loan with a high credit score makes you eligible for a higher loan amount at lower interest rates.

Don’ts: 

These are a few things you must avoid while applying for a bike loan:

Multiple Loan Applications: Multiple loan applications with different lenders will project you as a credit-hungry borrower, leading to loan rejections. Each application will pull a hard enquiry on your credit report, which will eventually reduce your credit score. Therefore, compare lenders, select the best deal, and make one final application with maximum chances of approval.

Overborrowing: Many lenders offer 100% of the bike’s value as a two wheeler loan. However, you must borrow minimum to avoid hefty interest costs. Check your savings and see how much you can afford to spend to pay the bike's price. Overborrowing will only stretch your budget and make EMI payments challenging. Use a two wheeler loan EMI calculator to calculate your EMI amount and borrow according to your monthly budget.

False Information: Never fill in any wrong information while filling up your loan application form. These days, NBFCs have the latest technologies to cross-check your documents and details. Any information you enter in the form is linked with your KYC details, and lenders have various ways to discover it. False information not only results in loan rejection but can also put you on the blacklist, after which you cannot apply again.

Skipped EMIs: One of the biggest mistakes loan borrowers make is skipping their EMIs. Deferred payments lead to hefty penalties and negatively influence your credit score. Defaulting EMIs may lead to the sale of your dream bike within a short period of buying it. Choosing an appropriate loan term using a two wheeler loan EMI calculator keeps EMIs manageable and saves your bike.

Follow the above do's and don'ts to keep your loan process smooth and straightforward and get the best loan deal possible. They will reduce your hurdles to half and secure numerous benefits your two wheeler loan provides. Choose a lender offering an instant bike loan at competitive interest rates with flexible repayment tenure. What’s more, compute your EMIs using an EMI calculator and make the best decision according to your repayment capacity.