Two-wheelers have become a popular mode of transportation, especially in urban areas, as they are more affordable and convenient. But, buying a two-wheeler can be costly, and not everyone can afford it upfront. A bike loan lets you purchase your dream bike or scooter without immediate financial strain. However, applying for a two wheeler loan can be overwhelming and confusing, especially for first-time buyers. 

Let us see the crucial points you must consider while applying for a bike loan to ensure a smooth and hassle-free process. 

5 factors to consider when applying for a Two Wheeler Loan

Before you apply for a bike loan, consider the five points listed below to make a better decision.

Spend time on initial research 

Before applying for a bike loan, consider your budget and how much you can pay monthly. It is essential to know the total cost of the bike, including the registration fees, insurance, and any other additional charges. Once you have determined your budget, compare different lenders and the nitty gritty of bike loans. It will help you find a lender that matches your requirements and financial situation.

Determine the bike you want to purchase. Lenders have different criteria based on the bike’s make and model. Once you have finalised the bike, use a bike loan EMI calculator to calculate the monthly EMI amount that you need to pay. This way, you will only borrow the right amount without putting much pressure on your monthly spends and not take on any extra burden. 

Eligibility criteria

Lenders have different eligibility criteria for bike loans. Some lenders require a certain income level, while others may have specific employment requirements. Other things include a minimum and maximum age limit and a specific credit score. Check the eligibility criteria before applying for a bike loan to avoid rejection and damage to your credit score.

Credit score and history

A good credit score increases your chances of getting a loan at a lower interest rate. This is because it is an indicator of your creditworthiness and repayment history. However, if your credit score is poor, you may still be eligible for a bike loan, but the interest rate will be higher. Before applying for a bike loan, check your CIBIL score to know where you stand.

Understand the loan terms and conditions

Loan terms such as the bike loan interest rate and tenure play a significant role in determining the total cost of the loan. Before applying for a bike loan, compare the loan terms of different lenders to find the one that suits your budget and requirements. Understand all the terms and conditions before signing the loan agreement.

Consider additional charges

Apart from the interest rate, additional charges may be associated with the bike loan, such as processing fees, prepayment charges, and late payment fees. When applying for a bike loan, it’s important to consider such additional charges. Be sure to inquire about hidden charges as well before signing the agreement.

Don’ts while applying for a bike loan

When applying for a bike loan, you should avoid making the following mistakes to increase your approval chances:

Providing incomplete or incorrect information

One of the biggest mistakes people make when applying for a bike loan is not providing complete or correct information. It can include leaving out key details about your income, employment status, or credit history or providing inaccurate information. This can slow down the approval process or lead to your application being rejected. It can even result in legal consequences if you are found to have deliberately provided false information.

Applying with multiple lenders

When you apply for a bike loan with multiple lenders, they run a credit check. This is known as a hard enquiry, a large number of which can harm your credit score. Applying for multiple loans within a short period can make you look desperate for credit and hurt your chances of approval.

Applying with unauthorised lenders

Another mistake to avoid when applying for a bike loan is working with unauthorised lenders or loan sharks. While these lenders may offer attractive deals and an easy approval process with no or minimal paperwork, they often charge exorbitant interest rates and fees that can quickly spiral out of control. Furthermore, they may engage in illegal or unethical practices that can put you at risk.

In conclusion

Applying for a bike loan requires careful consideration of various factors, including your financial situation, credit score, loan terms, interest rates, and repayment capabilities. Choosing a bike loan that fits your budget and offers flexible repayment options is crucial to avoid financial stress. By keeping these points in mind and doing proper research, you can secure a two-wheeler loan that helps you achieve your goals while keeping your finances in good shape.