In the current scenario of ever-rising fuel prices and increasing congestion on the roads, most of us search for a medium of commutation, which is economical, dependable and fast. In Indian conditions, the only mode of transport which ticks all the boxes are two-wheelers.
Many reasons contribute to the immense popularity of two-wheelers in India, major ones being fuel economy, road conditions, low-priced vehicles, and less maintenance.
Even though two-wheelers have comparatively lower prices than four-wheelers, they are still a considerable amount of investment. Thankfully, there are multiple options for opting for a Two Wheeler loan through NBFCs and other financing institutions.
The following article will discuss some critical factors you should consider before choosing your two-wheeler loan.
Major Factor To Consider While Applying For A Two Wheeler Loan
- Interest Rates
The most crucial parameter that you should consider while applying for a bike loan is the interest rate offered by the NBFC. The interest loans in the segment differ from 9.5% to 17%, and they also depend upon your credit score.
Also, always remember to clarify the repayment tenure your lender is offering besides the lower interest rates. It is always better to pick the option that matches your repayment scenario, i.e., the period in which you can pay back your loan and the interest amount you are comfortable paying.
You can use a bike EMI calculator to get a broader picture of your repayment options.
Other Important Factors
- Credit Score
The loan amount for which you are eligible is directly proportional to your credit score. Your credit score is the numeric depiction of your overall credit balance, reflecting your financial stability, i.e., your repayment capability to your credits.
Certain rating bodies and agencies keep track of your credit performance, i.e., CIBIL, Experian, Equifax. Therefore, always ensure that your credit history is healthy with a strong credit score.
- Eligibility Criteria
Every lender has a pre-set criterion regarding eligibility for the two-wheeler loan. Some of the general standards include:
- You must be at least 21 years old,
- The loan repayment should be before 60 years of age (65 in case you are employed).
- Moreover, you have to be a resident of your current address for a minimum of one year.
- There are some job-related eligibility criteria, too, i.e., you must have a stable job for at least one year.
- Documentation
Though two-wheeler loans comprise minimal documentation compared with the other loan categories, you still need to be ready with a few vital documents. Documents are essential for applying for a loan because the lender requires them to verify your details and process your loan application.
Some of these mandatory documents include your photo identity proof, address proof, income proof, photographs, etc. Some of the NBFCs may ask for a few other papers and statements to sanction your loan.
- Processing Fee And Other Charges
It is common for lenders to charge a processing fee before disbursing the amount, and it only surfaces at the later stages. Sometimes, the new customers aren’t even aware of the extra charges that they may be required to pay before the loan is sanctioned. Therefore, you should clear all such details beforehand.
Some lenders charge processing fees up to 3% of the total loan amount. Also, there are certain seasons which bring a lot of schemes and offers regarding processing fee. For example, many NBFCs either reduce or waive off the entire processing fee during festive seasons like Diwali and Durga Puja.
Again, you can use the bike EMI calculator to get your adjusted repayment scenario.
Conclusion
Owning a vehicle is still a dream for many people, and they save their hard-earned money for the special day. Thankfully, the NBFCs that offer vehicle loans aren’t just financial institutions, but they also work as a two-way benefitting functionary. If you plan to buy a two-wheeler anytime soon, don’t forget to check out the loan offered by such institutions.