4 key tips to keep in mind before taking a two-wheeler loan

A recent report of CRIF High Mark Creditscape Volume XI – June 2022 on two-wheeler loans reported a positive growth trend for the sector. Consumer sentiment has improved in April 2022 as per RBI’s consumer confidence survey. Also, there is interest in electric two-wheelers due to the government subsidies being offered. Additionally, market dynamics such as flexible loan schemes and multiple lenders to choose from are fueling the growth of this sector.

Applying for a two-wheeler loan may seem like a lengthy process, but the loan can be applied successfully and availed easily with the right steps and guidance. Two-wheeler buyers applying for loans can use the tips and benefits listed below to make an informed choice.

Here are some tips to ensure a smooth two wheeler loan application process:

1. Determine your eligibility and choose the best option: You can determine whether you meet the loan eligibility criteria specified by the lenders, such as minimum gross income, age limit, and state of residence among other parameters. Based on this you can check which lender offers the loan with better terms which meets your requirements and is beneficial for you. Also, check for special offers by lenders, especially during the festive season

2. Calculate the loan amount: Check the loan amount provided by the lender and ensure that it meets your financial requirements for availing the two wheeler loan. Plan the loan keeping in mind the EMI options available, down payment to be made, competitive interest rate, loan tenure, prepayment options and other charges

3. Keep Documents Ready: Generally, at the time of loan application process, lenders ask for documents like income proof, bank details and KYC documents. Check the documents required for the loan application and organize them before submission to ensure a smooth approval process

4. Strong Credit Score: Your credit score is one of the important factors that lenders consider while evaluating a loan application. To maintain a good credit score, you must repay your loans on time, maintain a good credit utilization ratio, avoid multiple credit inquiries and monitor your credit report regularly. A healthy credit score will help you get better loan terms as it proves your creditworthiness to the lender

Apart from this, you can take advantage of the many attractive features that two wheeler loans offer to buyers. Some of the key features are listed below:

Easy and quick loan application process: Lenders often operate from dealer premises and generally offer a simple loan application process and quick loan decisions. Most of the lenders nowadays offer doorstep banking and fully digitized processes to the eligible borrowers

Affordable Interest Rates: In an expanding market with multiple players offering two wheeler loans, two wheeler loans are available at attractive interest rates

Flexible Loan Schemes: Two wheeler loans are available with flexible repayment tenure ranging from 12 months to 60 months

Pay off your loan in manageable EMIs: The longer the loan tenure, the lower the EMI. You should choose a loan tenure that best suits your financial situation so that the EMI payments do not weigh heavily on your wallet. Structured EMI options are available for both salaried and self-employed individuals

Improve your credit score: Repaying the loan amount on time will help in building a good credit history and will help in boosting your credit score

Buyers should take a look at these attractive features of two wheeler loans and follow these tips. An informed and planned approach will prevent unexpected surprises and give you better control over your finances.

Author: Sanjit Davar, Managing Director, CRIF High Mark