Do’s and Don’ts While Applying for a Bike Loan in India

A bike loan is a secured loan designed to finance a two-wheeler purchase. These loans are beneficial for individuals wanting to purchase a bike or scooter without immediately shelling out a huge sum.

A bike loan allows them to buy their desired bike now and repay its cost in EMIs later. Although applying for a two-wheeler loan is easy and quick, you must remember some do’s and don’ts to ensure a smooth and easy approval process. Read on to know more.

Do’s When Applying for a Bike Loan

Remember to do these things when applying for a bike loan:

● Research and Compare: Extensively research the various loan offers and lending institutions before applying for a two-wheeler loan. Compare their interest rates, loan amounts, repayment terms, and other terms and conditions to ensure you get the best loan deal for your eligibility.

● Check the Eligibility Criteria: Before applying, ensure that you fulfill the lender’s eligibility criteria. These include age, income, employment status, credit score, etc. Not fulfilling any of these conditions may lead to rejection, hurting your credit score and eligibility for future loan applications.

● Choose an Adequate Loan Term: These days, many lenders offer flexible EMI options. You can select a loan tenure with easily manageable EMIs according to your budget. A bike EMI calculator calculates the monthly installments for different loan terms. You can choose one according to your monthly repayment capacity.

● Borrow an Appropriate Loan Amount: Evaluate your loan requirement based on the bike’s cost and financial situation. The more you borrow, the higher will be your loan burden. Therefore, you must borrow only what you can conveniently repay. Use a bike EMI calculator to decide if you can repay the EMIs for the loan amount you are considering borrowing.

● Check and Improve Your Credit Score: A good credit rating impacts your loan approval and interest rate. Therefore, check it before applying and ensure it is good enough to attract a good loan deal. If it is low, take steps to improve it to boost your chances of approval. Reducing your outstanding dues, lowering your DTI and CUR, and diversifying your credit portfolio are ways to improve your credit score quickly.

● Add a Co-Applicant or Guarantor: Adding a co-applicant or guarantor in the loan application increases your chances of getting loan approval at better interest rates. Ensure that the one you add has a good credit score and a stable income. Lenders feel convinced to offer you a better loan deal due to the double repayment guarantee they receive with a co-applicant or guarantor.

● Fill Out the Application Form Properly: Double-check the information you enter when applying for a bike loan. Ensure that the form has all the correct information, and does not skip any relevant details. Incorrect information and errors in the application form make the process cumbersome, delay the approval, and reduce the chances of sanction.

● Submit the Necessary Documents: Documents are a crucial part of a two-wheeler loan application. Check the lender’s documentation requirements and gather them before applying to accelerate the loan process. The lender offers a better loan deal if you complete the documentation efficiently on the first attempt.

● Understand the Terms and Conditions: Read the loan agreement carefully and understand all the terms and conditions before signing on the dotted line. These include conditions related to interest rates, processing fees, loan prepayment, additional charges, hidden charges, consequences of missed EMIs or default, etc.

Don’ts When Applying for a Bike Loan

Following the do’s significantly increases your chances of getting a bike loan approval quickly and easily. Now, it’s time to understand the don’ts you must avoid when applying for a two-wheeler loan. These include the following:

● Don't Hide Anything in the Application: Giving wrong information or hiding anything in the application form can seriously impact your approval. The lender will eventually identify it and reject your loan application. Loan rejection negatively affects your credit rating, making it more challenging to get loans in the future. Therefore, it is important to provide all information honestly and accurately in the application.

● Don't Opt for the Longest Possible Loan Tenure: Long repayment terms provide smaller EMIs. However, the convenience comes at a cost. A longer tenure distributes the repayment amount in more installments, causing the interest cost to increase. Therefore, use a bike EMI calculator to choose the shortest possible tenure with affordable EMIs.

● Don't Delay Loan EMIs: Delaying EMI payments has serious consequences, including late payment penalties, higher interest costs, and damage to the credit score. Therefore, prioritize your EMI payments to build trust, improve your credit score, and avoid unnecessary complications. If you are facing challenges in repaying your EMIs, consider loan restructuring.

● Don't Apply for Multiple Loans: Applying for a loan at many places gives the impression that you are credit-hungry. It reflects a high credit risk, hurting your chances of getting loan approval. Moreover, each loan application pulls a hard inquiry on your credit report, causing the credit score to dive down and hurt your loan eligibility. Instead of applying for multiple loans, research and compare the loan offers and choose one with the most suitable interest rates, eligibility conditions, processing time, etc.

Points to Remember When Applying for a Bike Loan

Here are a few key points to remember when applying for a bike loan:

● Research and compare the loan offers to get the lowest interest rate.

● Choose the shortest possible tenure with affordable EMIs.

● Use a bike EMI calculator to calculate the EMIs and choose an EMI plan most suitable to your repayment capacity.

● Enquire about the prepayment option and the associated charges.

● Read the loan agreement carefully to understand the terms and conditions fully.

Following these do’s and don’ts when applying for a bike loan is essential for securing the best loan deal. Thoroughly understand the terms and conditions and maintain a high credit score to present yourself as a creditworthy borrower.

(No Hans India Journalist was involved in creation of this content)