A Complete Guide to Choosing the Best Two Wheeler Loan
Last Modified: 11-January-2023
When you think of a two wheeler, it is most likely that you are thinking of scooters, bikes, and mopeds. A newly purchased two wheeler can last for more than 1 lakh kilometers and choosing a right two wheeler would give you the freedom to weave your way through the crowded roads to work, travel to a picnic spot with friends, or give in to the wanderlust for a journey uphill without any worries.
There is no need to put your dream of owning a bike or scooter on hold due to a lack of funds when you have companies like Muthoot Capital Services Limited by your side which provide instant two wheeler loans at lower interest rates. The reason why people hesitate to opt for a loan is their encounter with companies having complex loan disbursal processes, higher interest rates & processing fees.
It is Now Easy to Apply for A Bike Finance
You can apply for a scooter or bike finance online with an essential list of documents. The loan can now be availed within a few hours. But, before you collate your documents and start applying for a loan, let’s understand the various elements involved in detail.
Understanding the Loan Nomenclatures
For those who are taking a loan for the first time, you first need to understand the nomenclature or phrases that the lenders will use.
Loan Amount – It is the amount that you take as the loan -it is also referred to as the principal amount. The loan amount you are applying for takes into account the cost of the two-wheeler and your repayment capacity. Muthoot Capital Services Limited (MCSL) offers up to 100% of the on-road price of the vehicle as a loan.
Interest Rate – The interest that the borrower is expected to pay on the principal amount is calculated basis of a certain percentage called an interest rate. It starts as low as 0.99% per annum at MCSL
EMI or Equated Monthly Installment – This is one of the most important factors to consider when searching for the best bike loan. It is the amount that the borrower is expected to pay the lender every month. With each installment, you are paying back a part of the principal amount and interest accrued on the loan.
Loan Tenure – It is usually the number of months within which you are supposed to repay the loan amount. You have the option of choosing a tenure ranging from 12-48 months.
Repayment Capacity – Your current income and expenses along with other loans you have are taken into account to judge your repayment capacity. It helps to calculate the EMI you can pay comfortably for the full tenure. The repayment capacity has a direct impact on your loan amount eligibility.
Processing Fees – It is a one-time, nominal charge for processing your loan application.
Planning for Your Two Wheeler Loan
Though companies like MCSL provide a quick, no-hassle, easy to secure, and attractive two wheeler loan, the importance of researching and knowing what you are getting into can never be undermined.
Here Are Some Things You Need to Keep in Mind To Choose The Best Offer Two Wheeler Loan Offer:
- Planning your purchase: During festivals and at the end of the year, you can avail attractive offers and discounts. These include no processing fees and benefits like free insurance.
- Knowing the loan amount eligibility: Most lending institutions take into account your credit score. However, as explained above, your repayment capacity is judged to know the loan amount you are eligible to get. As a rule of thumb, a person with a salary of 15,000 can secure the best bike loan for up to 45,000 rupees.
- Researching the other eligibility criteria: When you approach a lender for a loan, there are eligibility criteria such as age and income you need to keep in mind. For example, MCSL offers loans to people who are 18 years of age, at the time of application and 65, at the end of the loan tenure.
Creating a Repayment Plan
In 2019, 4.13% of people who took out two wheeler loans risked default on its payment. Creating a financial plan is important to ensure you can make the EMI payments on time. Some steps you can take when planning your repayment:
- Reach out to the customer care representative who can help you plan the repayment.
- Use the online loan calculator. It is an easy-to-use tool where you can choose the loan amount, interest and tenure to get the EMI. The EMI should not be a burden on your current finances.
- Factor in fuel and other costs. While planning your monthly budget, keep in mind the cost of fuel, service charges, etc.
- Plan for contingencies. It is a better idea to opt for a longer loan tenure and save money for other expenses you are likely to incur.
Keeping Your Documents Ready
Lenders expect you to submit documents as per the rules and regulations of the RBI- NHB and their protocols. Here is a generic list of documents you need to keep ready:
- Proof of Residence (ration card, driving license, Voter ID, Passport, credit card bills, electricity bill)
- Proof of Identity
- Income Proof (Salary slips for employees. Tax return forms for self-employed professionals)
- In the case of asset-based loans, you need to furnish asset proof – land/building/house tax receipt
- Passport size photographs
- Applying for a Two Wheeler Loan?
Once again, the application process may vary across lenders, and follow the general pattern mentioned below:
- Click on the ‘apply’ button.
- Fill in your personal information.
- Verify your mobile number with OTP.
- Select the preferred brand of vehicle.
- Fill in details about your residency.
- Fill in your income details and the required loan amount.
- Don’t forget to tick the box before hitting the accept button on the final page.
After completing the online process, you should receive a referral ID through messaging. Save this for all future correspondence. A customer care executive gets in touch to help you complete the formalities.
It is easy to get a bike or scooter loan, as long as you meet the eligibility criteria. Researching the interest rates and repayment capacity to make an informed decision.
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