When financing a new bike, understanding the role of your CIBIL score in bike loan eligibility is crucial. As a borrower, it's essential to know the threshold at which lenders consider your CIBIL score admissible for a two-wheeler loan. We are inclined to provide bike loans to individuals with a minimum CIBIL score of 750. However, even if your score falls slightly below this mark, you still have opportunities to secure the loan you need. In this post, we'll explore the significance of CIBIL scores for two-wheeler loans.
Importance of CIBIL Score For Bike Loan
Your CIBIL score is vital when applying for a two-wheeler loan, but it's not the only factor to consider, so don’t worry if you have a low CIBIL score. With a bike loan, you enjoy the advantage of a lower down payment, typically around 5% of the bike's value, as we finance up to 95%. Furthermore, the quick loan process allows you to secure an instant loan online within a day. Repayment tenures are flexible, ranging from 12 to 48 months, offering you convenient options to manage EMIs and online payments. Additionally, there is optional insurance coverage, ensuring buyer protection at a nominal annual premium.
Why should you Consider Taking out a Loan for Buying a Bike?
Taking out a two-wheeler loan to fund your purchase can help you repay the loan EMIs conveniently over a tenure of up to 48 months. It can help you get the bike with up to 95% finance of the overall cost, provided you have the required CIBIL score for a bike loan.
Let's explore the compelling reasons to consider financing your bike purchase.
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Low Down Payment Amount
- A higher CIBIL score indicates a good credit history, which can enable you to secure a bike loan with a lower down payment. This means you'll only have to pay a 5% of the bike cost, making the purchase more affordable and accessible. -
Low Processing Charge
- A good CIBIL score reflects your creditworthiness and financial responsibility, which can influence the processing charges associated with your bike loan. This can help reduce the overall cost of acquiring the loan and make it more affordable in the long run
How to Get a Two Wheeler Loan with a Low CIBIL Credit Score?
If you find yourself with a low CIBIL score and are in need of a bike loan, there are several avenues available to explore.
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Increase the Amount of Down Payment
- A low CIBIL score results in a higher down payment for a two-wheeler loan. And increasing the down payment will reduce the loan amount and interest charges. -
Arrange a Co-signer
A trustworthy guarantor or co-signer with a strong CIBIL score increases your creditworthiness, and when the lender is evaluating your loan application, you will get approved despite the low CIBIL score. -
Compare Interest Rates
When financing a bike loan with a low CIBIL score, it is crucial to compare interest rates. Avoid accepting the initial offer you receive and negotiate.
Impact of a Low CIBIL Score on Two-Wheeler Loan
| Consequences | Explanation |
| Higher Interest Rate | A higher interest rate applies due to increased risk associated with insufficient repayment capabilities reflected by the minimum CIBIL score for two-wheeler loans. |
| Lower Loan Amount | Lenders may sanction a lower loan amount to mitigate risk when dealing with borrowers with a low CIBIL score. |
| Rejection of Application | The loan application might get denied if your minimum CIBIL score is too low for a two-wheeler loan application, indicating a higher risk for repayment. |
| Requirement of Co-applicant/Guarantor | A co-applicant or guarantor might be needed to provide security against defaulting on payments for borrowers with a low CIBIL score, reducing the risk for the lender. |
How to Improve Your CIBIL Score for a Bike Loan?
A higher CIBIL score for a two-wheeler loan improves approval chances and secures lower interest rates and better terms. To enhance the score, borrowers should take these steps.
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Check the Credit Report for any Discrepancies:
To understand why you have a low CIBIL score, check for missed EMIs and credit report errors. If any discrepancies are found, complain to CIBIL for rectification. -
Pay Credit Card Bills:
Borrowers with outstanding credit card bills should prioritise paying them in full. Paying only the minimum balance due negatively affects the credit report. -
Repay the EMIs Timely:
Ensure to pay the EMI on the due date if you have any ongoing loans. Timely repayment of EMIs increases credit scores, which reflects positively in their credit report. -
Limit the Credit Utilisation:
Credit cards play a vital role, so keep credit card usage below 30% of the credit limit. Excessive usage indicates a dependency on credit to meet financial needs, which can impact overall creditworthiness. -
Don’t Make Hard Inquiries:
Multiple hard inquiries for loans decrease the CIBIL score as each inquiry can lower it by 3-5 points, indicating dependency on loans. Borrowers should limit such inquiries and then apply for bike finance, as without good CIBIL score it may not be possible to get approved for a loan.
Conclusion
A higher CIBIL score increases the chances of loan approval and get favourable terms. Borrowers with a minimum CIBIL score can still explore options for bike loans. By taking steps to improve their credit score, such as checking for discrepancies, paying credit card bills on time, timely loan repayments, and managing credit utilisation, they can enhance their creditworthiness. Additionally, it's essential to limit hard inquiries and compare bike loan interest rates to make informed borrowing decisions. Remember, a good CIBIL score opens up more opportunities for affordable bike financing.
FAQ
Can I buy a bike without CIBIL score? Yes, you can buy a bike without a CIBIL score, but it may limit your financing options.
Can I get bike loan with a 500 credit score? Getting a bike loan with a credit score of 500 can be challenging, as most lenders prefer higher scores.
Does missed EMI affect CIBIL? Missed EMI payments can negatively impact your CIBIL score, potentially affecting your eligibility for future loans.
How often should I check my bike loan status? It's recommended to check your bike loan status periodically, especially after submitting an application or making a payment, to ensure everything is progressing as expected.
