Take A Two-wheeler Loan And Simplify Life

Two-wheelers are a popular alternative to public transportation and cars. This is because it can easily navigate through Indian traffic and is also one of the most cost-effective modes of transportation. It is so common that even in the remotest part of India, you can hear familiar noises from a two-wheeler’s engine. However, buying a two-wheeler in one go may not be easy for many and this is where two-wheeler financing comes into the picture. For many two-wheeler owners living in small towns and rural areas, a scooter or bike is something that falls under the “luxury assets” category—a dream or a necessity for which they do not always have the requisite funds. In such scenarios, a two-wheeler loan emerges as a saviour, allowing individuals and families to buy their dream bike and pay the loan using easy EMI over a comfortable tenure. 

If you are planning to apply for a two-wheeler loan, you probably have a lot of questions such as how a two-wheeler loan is calculated, what the two-wheeler loan interest rate would be, two-wheeler loan eligibility criteria and documentation, and more. Today, in this article, we will deal with each question and concern related to availing of a two-wheeler loan one by one.

What is a Two-wheeler Loan and How Does it Work?

As the name suggests, a two-wheeler loan is a type of financing that allows you to fund the purchase of your bike. When you apply for a two-wheeler bike loan, the financial institution checks your qualifying criteria based on which they disburse the loan amount. Under a two-wheeler vehicle loan, the bike is hypothecated with the lender, and if you fail to repay your dues, the lender will sell the hypothecated bike to recover its outstanding dues. Here, the maximum repayment tenure that you can avail of is 48 months during which you must repay the principal loan amount along with the interest component.
 

Advantages of Two-wheeler Loans

 
When it comes to buying a two-wheeler, you may have come across numerous loans for two-wheeler possibilities such as using personal loan to buy a bike or taking an HR loan from your workplace. However, we will explain why a two-wheeler loan is an ideal option for you.
 

1. High LTV Ratio: When you apply for a two-wheeler loan, you can get up to 95% of the value of your bike as a loan. It implies you only have to pay 5% out of your pocket, depending on your eligibility conditions.

1. Low Financial Burden: Not everyone can hope to have the necessary funds for buying a two-wheeler. Taking a two-wheeler loan saves you from the stress of paying all the money at once and instead gives you more time to repay the loan.

1. Helps Build and Improve Credit Score: Credit score plays a vital role in securing any type of loan. However, to have a credit score you need to first take a loan. Two-wheeler loans are a good starting point as they are relatively easier to repay and leave you with a healthy credit score.

1. Income-friendly Schemes: Unlike car or housing loans, two-wheeler loans are extremely affordable. Any person with a reasonable salary can afford to pay the monthly EMIs easily.

1. Covers Additional Costs: In most loans such as housing or equipment, the loan amount only covers the cost and not the extra charges that come along. However, two-wheeler loans also consist of insurance, registration and accessories costs. In other words, a two-wheeler loan pays for the entire commodity, not just the base price.

1. Convenient Process: If you want to apply for two-wheeler loan online, then you can do so with just a few clicks. The two-wheeler loan approval takes only a few minutes, thanks to minimum documentation and a simplified application process.

1. Easy Eligibility: The financial institutions do not have any severe qualifying conditions. In fact, a two-wheeler loan is available for low-income individuals as well.

Eligibility and Documentation

The eligibility criteria for two-wheeler loans are fairly easy to meet. You just need to be

1. A salaried employee or self-employed and be over the age of 18 years.
2. You must have been in employment for at least 6 months or in business for at least 2 years.

The necessary documents required for a two-wheeler loan are:

1. A photo identity proof (includes PAN card, passport, driving licence, voter ID, Aadhaar).
2. An address proof (includes passport, ration card, driving licence etc.)
3. Income proof (for a salaried person) or income tax returns of the past 2 years (for a self-employed person).

 
Also Read: Bike Loan Application – Tips to Check the Status and Get Approved Fast
 

How to get a Two-wheeler Loan? 

 
If you want to apply for a two-wheeler loan, you can do it either offline at a branch of your preferred lending institution or online at the lender's website. In case you want to apply for a Hero FinCorp bike loan, follow the steps below:
 

Hero FinCorp Two-wheeler Loan Online Process: 

• Visit the Hero FinCorp website and go to the two-wheeler loan section.
• Click on the ‘Apply for a Loan’ section.
• Fill in the required information and choose your preferred Hero MotoCorp Two-wheeler dealer from where you plan to purchase your dream bike. 
• Tap on the checkbox to agree to Hero FinCorp's ‘terms and conditions,’ and then click on the ‘Apply Now’ icon. 

Hero FinCorp Two-wheeler Loan Offline Process:

• Visit a ‘Hero MotoCorp Two-Wheeler dealership' near your residence. To locate the nearby dealership, click here.
• Speak with one of our executives at the dealership regarding your two-wheeler loan request.
• Submit all your relevant documents such as duly filled application form, identity proof, proof of address, proof of income, and one passport-size photograph.
• Post verification of your submitted documents, the two-wheeler loan will be disbursed within 24-48 hours. 

How to Calculate EMI for a Two-wheeler Loan?

 
Nowadays, financial institutions offer customers an online tool that allows them to calculate their EMI in advance. All you have to do is go to the lender's website, scroll down to the two-wheeler loan section and use the two-wheeler EMI calculator to determine the EMI. If you don't know how to use this calculator, then follow the instructions below. 
 

• Enter Amount:

Using the slider, choose the amount you desire.
 

• Enter Interest Rate:

Depending upon your eligibility, choose the interest rate you think fits your profile. 
 

• Enter Tenure:

Two-wheeler bike loans are usually available for a maximum period of 48 months. You can also opt for a shorter term than 48 months.
 

How to get a better deal on a Two-wheeler Loan? 

 
Simply follow the guidelines below if you want to receive a low-interest rate on a two-wheeler loan.
 

• Compare Lenders:

Before signing your two-wheeler vehicle loan, compare two-wheeler loan interest rates and offers with various lending institutions. This way, you might be able to get a better bargain on your bike loan.  
 

• Loan Amount: 

If you opt for a lower loan amount, the lender might charge you with a lower interest rate. This is because the risk in such cases is smaller.
 

• Loan Tenure:

If you opt for a longer tenure loan, the applicable interest rate on a two-wheeler loan will be lower.
 

• Creditworthiness:

If you want a two-wheeler loan, be sure you have a clean credit history and pay your existing EMIs on schedule. The interest rate on a two-wheeler loan is higher for applicants with a bad credit history.
 

• Income Stability:

Even though two-wheeler loans are easily available to those with low income, the lender will nevertheless look into your financial stability. If you have steady employment and a consistent stream of income, you can easily receive an affordable rate of interest for a two-wheeler loan.
 
Also Read: Things to keep in mind while choosing the right lender for two-wheeler finance
 

Points to Consider

1. Monthly EMI: Your monthly EMI is one of the most important factors to consider while going for a two-wheeler loan. Since you are the one paying back the loan, you need to have flexibility regarding the money you pay back every month. Some lenders give you this flexibility, while others have fixed EMI options.
    
2. Down Payment: Down payment allows you to use whatever extra funds you have and reduce the pending repayment amount which is chargeable for interest.
    
3. Interest Rate: Perhaps the second most important factor in any loan is the interest rate. As a rule, you need to go for loans with lower interest rates. Fixed interest is generally considered in the case of a two-wheeler loan.
    
4. Tenure: Tenure of loan repayment is important too. If you are someone who wants to repay the loan quickly to claim complete ownership of the vehicle, then you should opt for a shorter tenure. In most cases, longer tenure is simpler and preferable as it offers a lower EMI.
    
5. LTV: Loan-to-value ratio also plays an important role. A low LTV implies that you pay more up front and a high LTV means longer tenure and maybe even higher EMIs.

 
Two-wheeler loans are one of the most popular loans, as they allow countless people to have a vehicle of their dream. Now that you know everything about it, it is time to book a ride.
 
Disclaimer: The post was first published on 8th May 2018 and has been updated for the latest information, freshness, and accuracy.