Tips for improving your chances of getting a two-wheeler loan
Article by Drivio | 22nd Jan 23
Two-wheeler loans have emerged as one of the most sought financial privileges. If you are keen to purchase a motorcycle without messing up your financial liquidity, it’s wise to go for a loan. Reputed banks and NBFCs finance motorcycles, mopeds, and scooters as long as you are eligible for the loan.
Now, you might be thinking how to become eligible for a two-wheeler loan. In this article, we have recommended the best practices that would enhance your eligibility for a two-wheeler loan.
Interestingly, taking a two-wheeler loan is a healthy sign for your credit score. For financially-responsible individuals, timely repayments boost their score and help the credit profile diversify.
So, what should you to do improve your chances of obtaining a two-wheeler loan? Read on to understand this matter better.
How can you improve your chances to qualify for a two-wheeler loan?
1. Improve your credit score
Whether or not you are financially responsible finds its reflection in your credit score. You are likely to qualify for a two-wheeler loan if this score is above 600. For individuals with a high credit score above 750, the chances of qualifying for a low interest rate are greater. So, work on your credit score, so that banks and NBFCs consider you to be a responsible borrower.
Here are some additional tips to improve your credit score.
Consolidate multiple loan accounts, so that the total number of accounts come down.
- Try to check your credit card usage to 30% of the eligible amount.
- Try not to miss any payments and make all the repayments on time.
- Diversify your credit profile while balancing personal loans, home loans, automobile loans, and credit card loans.
- Retain the oldest credit account and make sure not to close it. This would enrich your credit profile with a longer record of responsible finance handling.
2. Pay off your existing debts
Creditors tend to reject two-wheeler loans if you are already paying heavy EMIs on existing loans. Try to limit your EMIs to 50% of your salary, including the new loan you are about to take. Banks and NBFCs would approve loans faster when you don’t have much debts. In case your existing debt exceeds more than half your salary, try to pay them off. Remember, getting your two-wheeler loan application rejected can lead to a dip in your credit score. So, make sure to pay off your existing liabilities before applying for a new loan.
3. Pay a higher down payment
Regardless of the creditor you work with, you need to make an upfront payment while purchasing your motorcycle or scooter. This is the down payment you need to make. To improve your chances of qualifying for the loan, make a higher down payment.
Most insurers would require you to make at least 20% down payment. However, the more you pay upfront, the greater would be your chance to qualify for the loan.
4. Get a pre-approved loan
If your credit score looks healthy, many lenders would sanction a pre-approved loan for you. This implies that you have already qualified for the two-wheeler loan. This approval comes as a result of healthy financial habits. So, if you maintain a clean financial record, you can become eligible for a pre-approved loan.
With such loans, you would be paying marginally lower interest rates. This is because, the lender is already aware of your repayment capacity.
5. Show a consistent income source
One of the effective tips to help you secure your two-wheeler loan is to show a consistent income level. Salaried people need to furnish proper documentation like their salary slips. Business professionals, on the other hand, need to provide their IT files as an income proof.
If you manage to show your financial stability through a consistent income, you can qualify for the two-wheeler loan faster. Based on your location, most lenders would expect you to show a monthly salary of at least INR 25,000. If your income level is high, obtaining the loan would be much easier.
6. Show collateral
If your financial strength falls short of qualifying you for a two-wheeler loan, try to show your collateral. This implies that the lender would finance the purchase based on your assets. Whether you have a high-value car or a home, you need to show them as your collateral.
However, most borrowers qualify for these loans without collateral. In case your income level is low, or you don’t have a good credit score, you can get a two-wheeler loan through collateral.
7. Get a co-signer
To boost your eligibility for the two-wheeler loan, apply for the financial privilege along with a co-signer. This implies that the bank or NBFC would be evaluating the income and repayment capability of both the applicants. Naturally, you can qualify for a higher amount of loan when you apply with a co-signer.
In case you are purchasing a high-value motorcycle or scooter, you can apply for the loan with a co-signer. This way, you can demonstrate a greater repayment capability to your lender.
8. Be transparent with your documentation
When it comes to any kind of financial privilege, banks and NBFCs would scrutinize your documents. Unless you have every necessary document in place, the chances of getting rejected for your two-wheeler loan are high.
Here are some of the commonly required documents to obtain a two-wheeler loan.
- Your application for with the signature
- Identity proof
- Income proof
- Salary slip for 3 months
- IT file for 3 years
If your repayment history is perfect, obtaining a two-wheeler loan wouldn’t be a challenge. With these tips, qualifying for your two-wheeler loan wouldn’t be an issue.
Reputed banks and NBFCs offer loans with flexible repayment tenures and low rates of interest. A healthy credit score, along with proper documentation can help you acquire the loan.