CIBIL score depicts the creditworthiness of the borrower that helps the financial institutions assess their repayment capabilities. Therefore, the CIBIL score does matter in the case of two-wheeler loans. A lower CIBIL score decreases the chances of getting the loan sanctioned. Even if the financial institution sanctions the loan, the interest rate and other charges increase due to a lower CIBIL score.
Is two-wheeler loan interest deductible under the income tax?
Usually, the two-wheeler loan interest is not deductible under the Income Tax Act, 1961. However, there are certain exceptions to these.
Firstly, if the two-wheeler is purchased for business, the loan interest can be claimed as a deduction in the form of business expenditure. This will reduce the business profits, leading to tax savings.
Secondly, the government has launched various initiatives to promote electric vehicles. One such initiative is interest deduction on electric vehicle loans under Section 80EEB of the Income Tax Act, 1961. This is applicable for both electric cars as well as two-wheelers. The amount of deduction available is up to Rs. 1,50,000 for each Financial Year.
What are the documents required for a two-wheeler loan?
Two-wheeler loan documentation requirements are minimal. One only needs to furnish the following documents in order to avail of a two-wheeler loan:
1. Identity Proof (any one of the following):PAN Card | Driving Licence | Voter ID Card | Passport
2. Address Proof (any one of the following): Driving Licence | Passport | Gas Bill with Gas Book
3. Other Documents:Passport size Photo | Income Proof | Bank Statement | Cancelled cheque and ACH form for ECS Mandate | Vehicle Registration Certificate, duly endorsed in case of new vehicle
If I avail of a two-wheeler loan, will I be eligible for a subsidy from the government in case of an electric two-wheeler?
The government provides subsidies on electric vehicle purchases. This subsidy depends upon the battery capacity of the two-wheeler and the amount of subsidy differs among the states. Many borrowers fear whether the subsidy benefit will be lost in the case of two-wheeler loans. However, to their relief, even if the two-wheeler buyers go for two-wheeler loans, they can still avail of the subsidy benefit.
How can I know the amount of EMI?
You can pre plan your budget before applying for the two-wheeler loan. Using a two-wheeler loan EMI calculator lets you know the exact amount of EMI that you will need to pay. Just enter the loan amount, two-wheeler loan interest rate, and tenure of your two-wheeler loan.
In A Nutshell
While the four-wheeler is still considered a luxury in India, two-wheelers are a necessity for each household. Over the long run, commuting by public transport is time-consuming and costly. Two-wheeler loans have made two-wheelers affordable for each consumer.
The electric vehicle buzz has further boomed the two-wheeler segment considering its benefits. Government subsidy has further strengthened the initiative of rolling out more electric vehicles. Therefore, if you are planning to buy a two-wheeler, avoid a huge cash outflow by going for an easy and affordable two-wheeler loan with Shriram Finance.