Taking a two-wheeler with a loan can reduce your initial financial burdens greatly. You will get immediate ownership of the vehicle without having to wait for months to achieve sufficient bank balance. However, before you apply for a loan, you should know about the eligibility criteria in detail. Only then can you avoid your application from getting rejected due to one or many reasons. Apart from this, you must also know the factors that influence the loan EMI and interest rates for better finance management. With this in mind, we have illustrated the criteria you need to fulfill to apply for the loan. Additionally, we have also prepared a list of documents required for bike loan so that you won’t have further problems.
Eligibility conditions to apply for a bike loan
Whether it’s a national or a private lender, the eligibility criteria remain almost the same for everyone. Adhering to it strictly can help increase the chances of your application’s approval.
- Age: Every applicant should be at least 18 years of age. 60 to 65 years of age is usually maintained for the upper limit.
- Income: It’s mandatory to have a steady income source. Most lenders set a specific minimum income threshold depending on the bike’s market cost and the region.
- Down payment: You must have sufficient bank balance to pay the initial upfront amount for the two-wheeler. It can vary between 10% to 20% of the overall cost. If you want to avoid it, opt for a zero interest two wheeler loan.
- Credit score: One of the most crucial determinants for your loan eligibility is the CIBIL score. Any number lower than 750 is considered to be associated with higher financial risks. Lenders may disapprove your application or incur a high interest rate to compensate for the risks.
- Residence: You need to have a proper residential address. Lenders often check if the address is consistent for a certain period or not, like for a year.
- Citizenship: Every applicant needs to be an Indian citizen by birth or through other methods. Accordingly, you will have to provide the document along with your loan application.
Documents required for a two-wheeler loan
Following is the list of documents required for bike loan that you have to adhere to.
- Age proof (any of the below)
- Aadhar card
- PAN card
- Voter’s ID card
- Valid passport within expiry date
- Driving license
- ID proof (any of the below)
- Aadhar Card
- PAN card
- Valid passport
- Driving license
- Voter’s ID card
- Any document issued by the government, like a notarized affidavit
- Income proof (for salaried employees)
- Salary slips of the last 3 to 6 months
- Bank statements for the last 3 to 6 months
- Form 16 issued by the employer
- ITR file of the last 3 years
- Income proof (for self-employed applicants)
- ITR file of the last 2 years
- Bank account statements of the last 6 months
- Business registration certificate
- Employment proof (for salaried applicants)
- Employment certificate or offer letter
- Vehicle-related document
- Proforma or quotation having the detailed cost breakdown of the two-wheeler as provided by the concerned dealer
Tips to increase your bike loan approval rate
With so many diverse eligibility conditions for a regular or zero interest two wheeler loan, anxiety is anticipated. So, to ease your worries, we have discussed here a couple of tips that can increase your application’s approval rate.
- Maintaining a high credit score throughout
- Although a CIBIL of 750 is the benchmark, several lenders accept a score up to 650. If yours is lower than the latter, the application is likely to get rejected. So, try to maintain the CIBIL high so as to avoid unnecessary hassles.
- Do not miss any EMI or credit card bill payments. Failed or missed repayments usually impact the credit score negatively.
- Income stability
- Taking a two-wheeler loan will incur financial liability. If you do not have a stable income or your monthly earnings aren’t enough to cover the EMI amount, the lender may reject your loan application.
- Ensure all your income statements and ITR files are up-to-date, showing a consistent employment history.
- Lower income-to-debt ratio
- For applicants with existing loans, a higher debt amount will increase the chances of application rejection.
- Lenders calculate the DTI to assess the financial risks associated with the concerned loan application. If your DTI is above the benchmark value of 35, it can cause problems.
Conclusion
Knowing the eligibility criteria and the required document list will help you prepare your two-wheeler loan application better. Ensure you adhere to the conditions so that the application won’t get rejected midway. In most cases, increased financial risks due to poor credit scores, unstable income, and higher DTI are the main causes of bike loans being denied. Hence, once you focus on these aspects, you can get your dream two-wheeler easily with a proper loan.