A Ready Guide to Two-Wheeler Loans

Buying a two-wheeler is many a time your flight to freedom.

 

That first college bike or scooter is your grab at youthful romance. In the next few years, it is your ticket to riding into your workplace in style. Somewhere in between, one lucky girl or a boy gets to take a special pillion ride. A scooter, at a later stage, for the lady of the house comes with fresh air of independence. It helps in not only dropping her children to school but running errands and taking control of her life.

 

Let's shift to a less urban context where owning a two-wheeler is not just about mobility but also about greater financial freedom. A small-town salesman can make more sales visits, a building contractor can access faraway projects and a village doctor can be faster in reaching places during an emergency. While some users transform their bikes to carry more of their produce to the market, many others have gained access to more customers by saving big on travelling time. It's not just two wheels and a motor; for many Indians, it is what accessible dreams are made of.

So what is the easiest way to get to this dream?

To buy a bike you may need some kind of financing. For most people in India, it means securing a loan from a financial company or bank, since that is the easiest way to finance a bike. The biggest reason why bike financing is preferred by most customers is the ease of getting one. Compared to other loans, bike loans are easier to apply for, offer competitive interest rates, have special schemes for women, come with easy documentation and have flexible tenures.

Interestingly, for the rural population, buying a motorbike often means the first trip to the bank. It is through this loan experience that they take their first steps towards better prospects in their venture or their work by entering into the organised financial system, thus, driving the financial inclusion agenda as well.

 

There are quite a few questions that'll pop up in your mind if you are considering financing a two-wheeler for the first time. Will you be eligible for a loan? If so, how much? What are the interest rates like? How much EMI should you expect? What documents will you need? 

That is quite an exhausting list of questions, so let's get started on some useful information that will clear all your doubts regarding a two-wheeler loan.

Also Read: The Ultimate Guide for Selecting the Desired Two-Wheeler

What are the eligibility criteria for two-wheeler loans?

If you are applying for a bike loan at Hero FinCorp, you will need to meet the following two-wheeler loan eligibility requirements:

 

• Age: 

You should be an Indian citizen and must be above 18 years of age. 

 

• Employment stability: 

As a working professional, you must have at least one year of experience and should have been in your present position for at least six months.
 

Hero FinCorp requires self-employed professionals to have been in their present business for at least a year while applying for a loan.
 

• Income: 

When it comes to applying for a two-wheeler loan, Hero FinCorp does not have any predefined income requirements.

Please note the above is not an exhaustive list and the criteria may change from one financial company to another.

Interest rates: When deciding the interest rate, financial companies take into account factors such as financial background and history. A trusted financial partner will offer you a comfortable interest rate that is not too heavy on the pocket so that there is no undue stress or burden on your finances. Today, most financial companies want to support their customers’ growth and be long–term partners with them. Therefore, you can expect fair rates as per your profile and past repayment behaviour.

 

To comprehend this in a better way, let's look at the various factors that affect the two-wheeler loan rate of interest.

What are the factors that influence two-wheeler finance interest rates? 
 

• Down payment:

Primarily, the lenders look into the amount you are putting as a down payment. A larger down payment indicates that the borrower is more invested. This provides comfort to lenders in terms of risk factors and may make the borrower eligible for a lower interest rate.

 

• Income: 

In India, you usually don't need a high income to get a two-wheeler loan. However, a high and steady income helps in lowering your interest rate on a two-wheeler loan. 

 

• Credit score: 

Usually, two-wheeler loans are known for building a credit history. Even if you have a bad credit history, you can acquire this loan. However, if you have a strong credit score, your prospects of receiving a lower interest rate are high.

 

• Age: 

If you are nearing retirement or are a retiree, the chances of securing a lower interest rate two-wheeler loan are slim. 
 

• Two-wheeler model: 

If you are purchasing a bike that has a higher future resale value, the lender may grant you a lower interest rate. This is because the bike is hypothecated with the lender. If you default on your loan, the lender may sell your bike to recoup its dues. As a result, bikes with a greater resale value are chosen over bikes with a lower resale value.  
 

• Residence: 

If you live in a metro city, you need to have a high income to meet your necessities. Similarly, the debt-to-income ratio is important in this situation. As a result, to qualify for a lower-interest bike loan in a metro area, your income should be a little higher. 

Also Read: How to Calculate Two-wheeler Loan EMI?
 

What are the documents required for a bike loan? 

 

• Mandatory documents: PAN Card along with duly filled two-wheeler loan application form and a passport-sized photo. 
   

• Identity Proof: Aadhaar Card/ Voter ID Card/ Passport/ Driver's Licence/ Photo ID Card issued by the Government of India. 

 

• Address Proof: Aadhaar Card/ Utility Bill/ Voter ID Card/ Property Tax Receipt/ Driver's Licence.

 

• Income Proof: Latest Salary Slips/ Bank Account Statements/ Latest ITR

 

While approving your bike loan, the lender may request further documentation they deem necessary.

 

Things to keep in mind while choosing the right financial institution to secure a two-wheeler loan:

 

Read all the terms and conditions very carefully. The fine print, as always, helps you understand the nuances under which you receive the loan. Here are a few things to consider:

• Fee and charges: Most people charge a one-time processing fee and include some additional charges to cover the costs for the paperwork.
• Promised interest rate: This is where your credit history and other factors come into play. If you have a good credit score, be sure to drive a hard bargain by calling comparisons.
• Plan benefits: Are there any supposed benefits of choosing this partner over another? Does the lender offer a lower interest rate to existing customers? Is there an added benefit of choosing one lender over the other?
• Insurance Policy coverage: How well are you covered throughout your loan tenure? Check for both accident and theft terms.
• Customer service: Go through the lender’s website, online review sites and forums where you'll hear what existing customers have to say. How soon do they respond to a genuine query or put you on a "your call is important to us" line?
• Turnaround time: Check out the processing time for the loan; the shorter the better, as always.
• Additional offers: During the festive seasons, many insurance companies launch giveaways and discount offers such as an assured gold coin with every purchase, a chance to win a house and free insurance.
• Prepayment benefits: Do they allow prepayments or is there a cap to the amount?

 

A word of caution here.

 

While the above pointers are important in choosing a particular financial company, it's also important to check the market reputation of the lender and the kind of customer service they usually offer. For example, you might have negotiated a low rate of interest for your bike loan from a lender but that might not have earned you an easy loan repayment process.

 

A single bounce of EMI, even though it might have occurred at no fault of yours, may lead to harassment. A lender with robust processes and technology will identify the reason for the EMI bounce quickly and take corrective action so that the customer is not inconvenienced. Thus, a trusted brand makes a better partner for financing than a party that is trying to sell you loans with cheaper interest rates.

 

Hero FinCorp, a part of India’s most-trusted business house 'Hero Group', has designed its processes and technology to make the entire loan process quick, easy and transparent. Built on the motto of 'Finance Made Easy', within a short time they have become the leaders in two-wheeler financing in India.

 

With all questions answered about the bike financing process, let's come to the main point and understand this:

 

• Simple Application Process:

It's very easy to apply for a bike loan. Online loan application has eased up the entire process and also made it faster to obtain finance. Also, the processing time of such loans is as less as 2-3 days.

• Multiple Options:

Due to the demand for bike loans and the number of players in the market, you can get loans at extremely competitive rates.

• Special Offers:

A lot of financial companies have special two-wheeler loan offers and discounts for their women customers.

• Available to Low-credit Individuals:

There are several options to get loans even in rural areas where there are no banks. Non-banking finance companies, which have a much larger reach in the rural areas, can be accessed by rural people who do not have access to banks or have been rejected by banks due to their low credit scores.
 

• All-inclusive Bike Loan:

The two-wheeler fund amount also covers the cost of accessories, registration, and insurance. As a result, getting a bike on loan is a better value because you won't have to pay for these extras out of pocket right away.
 

Also Read: Factors to Consider When Comparing Two-Wheeler Loans

Conclusion:

Today, a customer is spoilt for choice, and technology provides ready access to information that can give you an upper hand. Use it to your advantage. You can be anywhere in India and still access a two-wheeler loan within minutes of making an enquiry. Many lenders have their representatives stay in constant touch with their customers updating them on schemes and payment due dates, ensuring they don't miss their EMIs.

 

Your dream starts with just one vehicle but you'll be amazed to know that many people refinance multiple vehicles over the years with the confidence and support of a reliable financial company that becomes the backbone of a thriving business. Hence, take the first step by choosing the right partner in your journey to success.

 

If you have any further questions about taking a bike loan, please leave a comment and we would love to answer it for you.
 

Disclaimer: The post was first published on 17 June 2016 and has been updated for the latest information, freshness, and accuracy.