A Two Wheeler, in the form of a fancy bike, is a dream machine for many. You may have plans to purchase such a Two Wheeler and may have saved some money for the same. Even then, you may be faced with a situation where you need some additional funds in order to make your dream come true.
The Two Wheeler loan shall provide you with the fund for the purchase of the bike. The money taken on a loan needs to be paid back over a period of time with interest. The repayment of the loan is made in the form of equated monthly installments (EMI).
As a thumb rule, you need to consider the following before going in for Two Wheeler loans:
1. Check Your Creditworthiness
It will be advisable to check your credit score before you submit documents for loans with any institution. There are sites available with credit bureaus where you may put in your credentials like PAN Card number and check your score on a scale of 900 points.
A credit score of 750 and above is a very decent performance. That shows your creditworthiness and overall clean record of servicing other loans that you may have opted for. The direct advantage of having a good credit score is a lower rate of interest.
2. Eligibility Criteria:
While each financial institution may have its own document checklist, you will find some generic requirements which are common. The age criteria for eligibility of a Two Wheeler Loan is 21 to 58 years. If you are a salaried individual, a minimum of one year in current employment is mandatory. The minimum income from salary is Rs. 1.44 lacs. For a self-employed professional or a business, you need to be in the profession or business for at least one year. Along with the proof of income, identity proof, and address proof in the form of an Aadhar Card, you need to submit the last three months’ bank statements.
3. Ascertain Maximum Loan to Value (LTV):
Please ascertain the maximum amount of loan that you may get out of the ex-showroom price or value of the Two Wheeler. There are online EMI calculators available on official websites of the financial institutions and the sites of companies that are offering financial advice. You need to submit basic information like your income, proposed loan tenure, and the cost of the bike in the calculator. The EMI calculator will show the EMI amount to help you decide.
While arriving at the loan amount, you need not lose sight of your other monthly commitments. In case you have the provision of making a larger down payment, you should do so to keep the liability as low as possible.
4. Loan Application Process:
If you have done your homework before application, have the required documents, and have self-evaluated your eligibility, you may choose to apply online. All lending institutions have options of doing so. By filling up the basic credentials along with the necessary documents on the online platform, loans may be sanctioned within 24 hours. The loan amount gets credited into your account for utilizing the same for the purchase of the bike. It may so happen, the bank may disburse directly on the dealer.
When applying for a loan, you are also on the lookout for value-added services that may be offered. Bike Insurance schemes may be one of them. An insurance policy along with the Two Wheeler is a mandatory obligation for you. Even if you get simple bike insurance as first-time bike insurance, it will make a lot of sense to you in the form of instant savings.
As per the Indian Motor Vehicle Act, 1988, any Two Wheeler plying on the roads needs to be covered with at least a third-party insurance policy. It may be explicitly stated that without Two Wheeler insurance, no financial institution will sanction a loan. In fact, it is mandatory to have the financier’s name endorsed on the face of the policy and keep it till the loan is paid off.
With the online platforms offering various Two Wheeler insurance options, one may take advantage of express bike insurance. The policy gets generated instantly, and the copy is made available to you in your inbox.
Apart from the mandate as per the Indian Motor Vehicle Act, 1988, the Two Wheeler can benefit you in the following situations:
a. Protection Against Third Party Property Damage: The Two Wheeler insurance provides you with financial protection in case of damage caused to a third party’s property or vehicle. It also covers you in case of an injury caused to a third party.
b. Provides Coverage Against Theft: If your Two-Wheeler gets stolen, it is a stressful experience emotionally. At least the financial coverage coming from the insurance company upto the insurance amount may give you some relief. Even if there is severe damage to the Two Wheeler, the entire sum insured may get paid by the insurance company in the form of constructive total loss.
c.Covers Against Man-Made and Natural Disaster: The Two Wheeler insurance covers your bike against natural disasters like fire, earthquake, flood, and inundation. Also, the insurance policy protects you against man-made disasters like riots, strikes, terrorism, etc.
When choosing the insurer for your Two Wheeler, things that you need to be on the lookout for are the insurance company’s claim settlement record and the network of tied workshops. At the time of need, these are the key factors that will provide relief to you.
Student bike insurance policies are available in the market for students, alumni, or teachers of select institutions. Therefore, you need to check out if such offers are available for your institution as well.
As we have discussed new bikes all along, a thought may cross your mind – what if I have an old bike? Or, what if I buy an old bike which is heritage? Can I get it insured? Yes, you can. To qualify for classic bike insurance, the age of the bike has to be at least 20 years.