Two-wheelers are the most popular and suitable type of vehicle for working-class individuals. India is the second largest two-wheeler market after China, with 1,22,57494 total sales in the first three quarters of the financial year 2023. More than half of these bikes are made available with loan backings. Financial institutions design the eligibility of two-wheeler loans as per their policies. The documents and benefits, however, remain almost the same for all institutions.
Eligibility for Bike Loans
Below are some of the common two-wheeler loan eligibility criteria to follow:
Any resident and citizen of India can apply for a bike loan. The applicant must be above the age of 21 years when applying and must not exceed 65 years of age at the time of the loan maturity. Borrowers below 21 years might require a guarantor or co-applicant for loan application.
- Income Proof
There are two types of income proofs attached while applying for bike loans depending on the applicants. When the applicant is a salaried employee, the salary slip from the organization or bank statement can be accepted as income proof. If the applicant is a self-employed individual, their business account statements or income tax returns statements are attached to prove their income stability.
- Credit Score
Most institutions do not require very high credit scores for two-wheeler loan eligibility, depending on the vehicle’s price and the borrower’s financial stability. However, they might reject applicants with poorer credit scores for pre-elimination of any risky loans.
- KYC verifications
In recent years, KYC verifications have increased in financial services to ensure complete transparency for customers. KYC verification is an SMS and email-based verification of the applicant with their linked national identity proofs like a Pan Card and Aadhar Card.
Required Documents for Bike Loans
Apart from the loan application form, the invoice, and two passport-size photos, the crucial documents required for bike loans are:
- ID proof
Identity proofs accepted in the process for loan applications include Pan Card, Driving License, employment ID, and birth certificate (for age).
- Address proof
The documents accepted as address proof are Adhar Card, Passport, Bank Statement, and Electricity bill with the applicant’s name.
- Bank Statement
The applicant’s bank statement provides their financial history and can act as income or address proof in the application process.
- Salary Slip/Business Proof
Government and salaried employees need to provide their salary slips for the last three months and an experience of at least one year working with the organization. Self-employed individuals have to submit their income tax returns, business account details, or office electricity bills for verification.
- KYC Documents
KYC documents include the Pan Card and Aadhar Card of the applicant. Both identity cards are supposed to be linked with the applicant’s contact number. Any loan application is uncleared and void without completing a proper KYC verification process.
Benefits of Two-wheeler Loans
- Lenient Eligibility
Two-wheeler loan are secured loans with fewer risks since the underlying collateral is the vehicle itself. The eligibility for bike loans in India is far more lenient and simpler than other high amounts of unsecured loans.
- Instant Approval
Institutions offer online or digital services for loan applicants, and the applicant can apply online for the bike loan through a mobile phone application. Depending on the type of vehicle, applicant’s income, and credit score, instant loans are available with minimal time and effort.
- Flexible Repayments
Usually, bike loans are offered with flexible repayment plans from almost all institutions. Moreover, with the help of higher down payments, the number of monthly installments for bike loans is lower compared to home and business loans.
- Credit Score Improvement
Most two-wheeler loans are procured by young generations, at the beginning of their professional careers. A simple and affordable bike loan below Rs. 1 lakh, is effortlessly repaid by borrowers in small timely installments. These loans offer applicants to generate and improve their creditworthiness by timely repayment of the full loan amount.
Some lending institutions offer zero down payment loans for two-wheelers. There is no need for a down payment, as long as the loan applicant meets the eligibility criteria. Nevertheless, the interest rate and monthly installments are higher for these loans. One must carefully investigate the requirements, eligibility, interest rate, and price of the vehicle from varied sources to select the best loan option.