How To Get A Bike Loan For Students In India?

Two-wheelers, especially bikes, are a favourite mode of transport for students across India. Many young students, in the age group of 18 to 21 years, aspire to own a bike of their dreams. It not only helps them in commuting across the city but also brings them a sense of freedom. However, having no income makes it difficult for students to finance a bike. That’s where a bike loan for students comes into play.
What does it take to get a bike loan for students in India? Let's find out in detail. 

Does Indian Lender Provide Student Bike Loans?

Financial institutions provide bike financing to students if the applicant has a regular source of income from a part-time job or if he introduces a co-applicant to his bike loan application. Below is a detailed explanation of the qualification criteria. 
 

1. Age

Financial institutions might not accept your application if your parent (primary borrower) has reached retirement age or is about to retire in the next few months. The reason for this is a lower earning potential. Usually, people who have retired from their jobs have no income or rely on a meagre pension. Although the EMI is affordable, the repayment can still be challenging.
 
The minimum age requirement for a student bike loan is 18 years. 
 

2. Credit History

Your credit history reflects your financial discipline. However, as a student, the chances are that you have never applied for a loan before. In this case, the co-borrower credit history is critical. Before submitting an application, ask your co-borrower if they have ever defaulted on a loan or if there have been any recent EMI skips on their outstanding debt. Also, ensure they have not recently applied for multiple loans where the approval is still pending.
 
Remember that even a single adverse finding on your report will slim your approval chance. 
 

3. Income

Unlike other types of financing, two-wheeler loans do not have strict income requirements. The reason is that the financed vehicle is pledged as security against the loan. Getting approval is simple if you make a decent income, say Rs 15,000 per month.
 
Another reason for financing approval at low-income is affordable bike prices. Assume you want to buy a two-wheeler worth Rs 70,000. You are willing to pay a down payment of Rs. 25,000. In this case, the EMI for a Rs. 45,000 loan at a 10% interest rate and a repayment term of 48 months will be around Rs 1,141. This amount of EMI is affordable to people of all income levels.
 

4. Debt Coverage Ratio

Your ongoing debts EMI play a crucial role in bike loan approval. Let's understand how.
 
Suppose, as a student, you are making a monthly income of Rs 25,000. However, you recently used a consumer durable loan to finance your smartphone, television, and refrigerator. Your total EMI for your ongoing debts is Rs 17,500. That means 70% of your income is already being used to pay off your existing debt. In this case, your application will face denial even if your salary is eligible for a two-wheeler loan.


Also Read: Tips To Pay Off The Two-wheeler Loan Faster

5. Resale Value

Besides your credit profile, your bike's resale value also plays a crucial role in determining your loan eligibility.
 
Suppose you purchased a bike worth Rs 1,00,000. You paid Rs 10,000 as down payment, and the rest is financed. The bike loses Rs 80,000 in value after three years of ownership due to depreciation. If you default after three years, the lender will be unlikely to recover any unpaid dues.

How to Apply for a Student Bike Loan?

You can apply for a bike loan through a lender's branch or official website. Here is the explanation of the online procedure.
 

• Research and compare different bike loan options from various financial institutions.
• Gather all necessary documents, such as proof of income, identity, and address.
• Fill out an online loan application form with the chosen financial institution.
• Submit the required documents through the online portal.
• Lenders executives will cross-verify your details by employing AI and ML technologies.
• Wait for the loan to be processed and approved. The process can take several hours.
• Once you receive approval, sign the loan agreement and submit it to the financial institution.
• Start repaying the loan as per the terms of the agreement.

Besides the above process, you can apply for financing directly at the dealership. Financial institutions these days have tie-ups with bike dealers. You only need to submit your documents at the counter, and the lender's executive at the dealership branch will handle the rest.
 
Also Read: 5 TIPS TO PAY YOUR BIKE LOAN EASILY
 

Conclusion

As a student, it is possible to finance your dream bike. The only requirement is that you should be over the age of 18 and have a steady source of income. If you do not meet this requirement, you can apply for bike finance for a student with a co-borrower. Lenders usually consider parents as co-borrowers in cases of two-wheeler loans for students.