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What is a Two-Wheeler Loan?

A two-wheeler loan is a form of a secured loan that is given by a bank or an NBFC (Non-Banking Financial Company) to an individual to help him/her buy a bike or a scooter when he/she does not have enough funds to buy the same. This can help the individual with transportation to get through the city traffic with ease. Bikes and scooters are costly and so it is generally very hard for a person to pay the entire amount in one shot especially if one has other financial obligations for the month. So, a two-wheeler loan goes easy on the pocket as one can pay EMIs (Equated Monthly Instalments) on a monthly basis and repay the loan over a period of time.

Features and benefits of a Two-Wheeler Loan

  • Full financing of vehicle
  • Most banks and Non-Banking Financial Companies (NBFCs) finance up to 100% of the two-wheelers on-road price. In some cases, the registration and the insurance charges are also covered by the loan amount. This makes it very convenient for the customer as his savings do not get affected in one shot.

  • Flexible tenures
  • Two-wheeler loans generally have tenures that can extend up to 4 years. In some cases, tenures of up to 5 years is also possible. This lowers the cost of the EMIs that are paid by the individual, thereby making it affordable and repayable. The preferred tenure can be chosen by the customer based on financial needs and requirements.

  • Simple documentation
  • Most two-wheeler loans have very minimal documentation that needs to be done by the customer. ID proof, address proof and income proof are the only documents that are commonly asked for. This makes the process very easy and fast. This makes a two-wheeler loan very convenient to apply for a customer.

  • Speedy disbursal
  • Most lenders who provide two-wheeler loans ensure that the loan amount is in your bank account in 3 working days or sooner. Pre-approved loans are available for existing customers of the bank and these are disbursed even quicker.

  • Showroom and lender tie-ups
  • Most two-wheeler showrooms have tie-ups with certain banks for two-wheeler loans and these loans can be applied for from the showroom itself, thereby making it very easy for the customer to buy the vehicle.

Interest rates

Since a two-wheeler loan is a secured loan, the interest rates are generally low. The interest rate on a two-wheeler loan begin at just 9% and can go upwards depending on one’s credit profile, relationship with the bank and other factors.

Factors that affect interest rates for a Two-Wheeler Loan

  • Credit score:
  • If you have a good credit score that is above 750, then the interest rates for your two-wheeler loan will be low. A credit score is a three-digit number that ranges from 300 to 900. It acts as evidence for your creditworthiness to your lender. Lenders use your credit score to assess your reliability. So, if you have a low credit score, then your lender will consider you to be a risky customer and will increase the interest rate for the loan or reject your loan application. Always ensure that you check your credit score before applying for a two-wheeler loan.

  • Credit history:
  • If you have a long credit history that is good, then the interest rates from your lender for your two-wheeler loan will be lower than if you have a short credit history or a bad credit history. This is because your lender will view your past transactions with your past credit products to check your creditworthiness and your reliability. If you have a positive and long credit history, the banks will consider you to be reliable and will lend to you at lower interest rates. If you have a bad credit history, the interest rates will be higher as you will be viewed as a risky customer.

  • Income and job stability:
  • The higher your income, the lower the interest rate for the two-wheeler loan. This is because the lender considers you reliable and can judge that you can repay the loan without any monetary problems. Also, if you provide proof of regular income, then your interest rate will be lower as the lender can assess your potential to repay the loan without defaulting on payments. Also, a job with a reputed company that is listed with the bank can act as an added advantage to get a lower interest rate for the two-wheeler loan.

  • Relationship with lender:
  • If you have a good and healthy relationship with the lender you are borrowing from and are an existing customer with them, then the interest rates can be negotiated for and one can get a lower interest rate. This can help you lower the interest rates on your two-wheeler loan. Most lenders aim to please their customers and so they can lower the interest rates if you have a positive and long relationship with them.

Eligibility criteria for Two-Wheeler Loans

  • Must be a minimum of 18 to 21 years of age and a maximum of 60 years of age.
  • Must be a salaried employee or a self-employed individual
  • Must have a good credit score and a good credit history
  • Must have a regular monthly income
  • Must have a good relationship with the bank

This can change based on the bank/lender you are borrowing from. Do check your eligibility with the bank before applying.

Documents needed for Two-Wheeler Loans

  • ID proof (Aadhar card, Driving licence or Passport)
  • Address proof (Aadhar card, Driving licence, Passport, Voter’s ID or Electricity Bill)
  • Passport size photograph
  • Bank statement for about 6 months
  • Income proof (Pay slips)
  • PAN card
  • Form 16 (For self-employed individuals)
  • Income Tax Returns (For self-employed individuals)

These documents may vary slightly from lender to lender and so it is best to check the documents needed with the bank you are borrowing the two-wheeler loan from.

How to apply for a Two-Wheeler Loan

  • You can apply online by filling in the application form and turning in all the required documents.
  • You can apply in person by visiting the lender’s branch with all the needed documents and filling out the application form for the same.

Two-Wheeler Loan – FAQs

1. How much of the two-wheeler’s cost is funded by the lender?

Most banks and Non-Banking Financial Companies finance up to 100% of the two-wheelers on-road price. In some cases, the registration and the insurance charges are also covered by the loan amount.

2. What is the maximum tenure for a two-wheeler loan?

Two-wheeler loans have tenures that can extend up to 5 years.

3. Why are two-wheeler loans applied for by customers?

Two-wheelers are costly and so it is generally very hard for a person to pay the entire amount in one shot especially if one has other financial obligations for the month. So, a two-wheeler loan goes easy on the pocket as one can pay EMIs (Equated Monthly Instalments) on a monthly basis and repay the loan over a period of time.

4. What is the minimum and maximum age for applying for a two-wheeler loan?

The customer must be a minimum of 18 to 21 years of age and a maximum of 60 years of age.

5. What are the interest rates for a two-wheeler loan?

The interest rate on a two-wheeler loan begin at just 9% and go upwards depending on one’s credit profile, relationship with the bank and other factors.

News

Honda launches the first BS -VI compliant two wheeler in India12 Sep 2019

Honda Motors and Scooters India launched the first BS-6 compliant two wheeler in India. It is none other than its popular model Activa. The 125cc bike is said to be 13% fuel efficient than the existing versions that are compliant with BS-4 standards....

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Honda Motors and Scooters India launched the first BS-6 compliant two wheeler in India. It is none other than its popular model Activa. The 125cc bike is said to be 13% fuel efficient than the existing versions that are compliant with BS-4 standards. In addition, the new bike possesses superior technology and industry first features. You could be a owner of this latest bike with a two wheeler loan specially catered to your credit score. Apply today!

Get ready to own the country's 1st BS-VI compliant 2 wheeler4 Jun 2019

Honda Motorcycle and Scooters India (HMSI) will be soon launching India's first BS-VI compliant two wheeler. BS relates to emission standards as instituted by the Govt of India to regulate the output of air pollutants. Keeping up with the trends of t...

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Honda Motorcycle and Scooters India (HMSI) will be soon launching India's first BS-VI compliant two wheeler. BS relates to emission standards as instituted by the Govt of India to regulate the output of air pollutants. Keeping up with the trends of the market and buyer expectations, HMSI 's new launch will be equipped with a fuel injection system, electronic control unit, an O2 sensor, three-way catalytic converter, and an onboard diagnostic module. Bluetooth connectivity for better navigation is also expected to be an addition in BS-VI models. The model will be launched on 12 June 2019. Get yourself ready to own this latest model with a 2 Wheeler Loan from Credit Mantri

ICICI Bank launches Insta Loans for purchase of two-wheelers6 May 2019

After the launch of Insta car loans, ICICI Bank has gone ahead to launch the same facility for buyers of two-wheelers too. Under Insta Two-Wheeler loans, the bank aims to provide the facility of instant sanction for over 12 million pre-approved custo...

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After the launch of Insta car loans, ICICI Bank has gone ahead to launch the same facility for buyers of two-wheelers too. Under Insta Two-Wheeler loans, the bank aims to provide the facility of instant sanction for over 12 million pre-approved customers. These customers will be able to get Instant Sanction for two wheeler loan up to Rs 2 lakhs with a tenure of 3 years. With this letter in hand, the customer can walk into the 2wheeler showroom of his choice and buy a two-wheeler without any wait. The loan will include 100% of the on-road price.

Yamaha launches its 155cc bike MT-1525 Mar 2019

To cater to the Indian market where riders look for diverse experiences in terms of speed and controls , Yamaha has launched its premium bike MT-15. This bike comes with features like liquid-cooled four stroke engine which is mated to a 6 speed trans...

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To cater to the Indian market where riders look for diverse experiences in terms of speed and controls , Yamaha has launched its premium bike MT-15. This bike comes with features like liquid-cooled four stroke engine which is mated to a 6 speed transmission, fuel injected variable vale actuation and single channel anti-lock braking system. MT-15 carries a price tag of Rs 1.36 lakh (ex-showroom Delhi). You could own your dream bike with a two wheeler loan that is suited to your profile here at Credit Mantri.

Two Wheelers above 125cc sold after Apr 2019 to come with ABS6 Mar 2019

Anti Lock Braking System (ABS) which is a regular safety feature for the four-wheelers in the country will soon be a part of two-wheelers with an engine displacement of 125cc and above. The rule was applied to all new launches post Apr 2018, while th...

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Anti Lock Braking System (ABS) which is a regular safety feature for the four-wheelers in the country will soon be a part of two-wheelers with an engine displacement of 125cc and above. The rule was applied to all new launches post Apr 2018, while the pre-existing models sold post Apr 2019 needs to be with ABS. In view of the above, the cost of existing models may see a price hike. So this might be your opportunity to get some deals if you plan to buy a bike over 125cc immediately.

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