Two-wheeler LoanTop-up Process: Know The Complete Details Here.
Article by Drivio | 15th Jun 23
A top-up loan for your two-wheeler would help you with additional fund inflow. You can manage expenses like bike repairs, maintenance, and upgrades using this amount. In most cases, you can qualify for top-up loans from the same lender from whom you have taken your two-wheeler loan.
As you brace up to purchase a new motorcycle, qualifying for a two-wheeler loan is easy. However, this loan can finance only up to 80% or 90% of the price of the motorcycle. Most banks and NBFCs would require you to make an upfront down payment. Moreover, owners need to factor in other expenses such as motorcycle insurance and registration costs. What would you do if you run dry on your finances?
Well, a two wheeler loan top-up can come to your rescue. A top-up loan for a two-wheeler is an additional loan that your existing lender might sanction if you require extra funds. If you have already shelled out the initial expenses from your pocket and need more funds for repairs, maintenance, or upgrades, applying for a loan top-up would ease your finances.
These loans are available only on top of the existing two-wheeler loan, and not as an independent loan. If your credit score looks good and you have adequate repayment capacity, your lender might readily sanction your top-up loan. This way, you can manage the additional expenses that your regular two-wheeler loan fails to manage.
In this article, we will discuss how you can apply for a loan top-up for a two-wheeler.
Understanding loan top-up for two-wheelers: How do top-up loans work?
A two-wheeler loan top-up is a kind of loan increase by the bank in addition to the existing loan. This is a facility that allows existing borrowers to obtain additional funds while leveraging the current loan as collateral. We have discussed the loan increase comprehensively below for your understanding.
Unlike a two-wheeler loan, a top-up loan doesn’t come with any restriction on how you can use it. Therefore, you can use the amount to get your vehicle insured, pay for its registration, or simply use it for personal purposes.
1.Evaluate your eligibility
Before you apply for a loan top-up for your two-wheeler, it’s imperative to evaluate your eligibility. Typically, lenders consider factors like your repayment track record, income stability, credit score, and the remaining tenure of the existing loan. When you fulfill these criteria, you stand better chance to qualify for the top-up loan.
2.Calculate the necessary funding
Find out the exact amount you need as a top-up on your existing two-wheeler loan. Consider why you need the additional funds. You might want to purchase additional insurance, upgrade the motorcycle, or pay for repairs. When you have a transparent estimate of the necessary amount, you can obtain the loan. This way, you can refrain from over-borrowing and ensure that you can repay the loan with ease.
3.Reach out to the lender
Now that you have decided to go for the loan top-up, reach out to your lender to know about their loan top-up policy. Go through their terms and conditions such as processing fees and interest rates. It’s wise to compare multiple lenders and find the one offering the most favorable terms. If necessary, you may also go for a loan refinancing from one of these lenders. This way, you can qualify for lower interest rates as well as a top-up loan.
4.Submit the necessary documents
Not all lenders would require you to submit the necessary documents while processing the top-up loan. In case ofloan refinancing, you may have to furnish these documents.
- Address proof like utility bills or rental agreement
- Identity proof like Aadhaar card, PAN card, or passport
- Income proof like bank statements, salary slips, or income tax returns
- Existing loan details such as the loan account statement and repayment records
5.Loan assessment and approval
The lender would evaluate your application once you submit the necessary documents. After scrutinizing your profile and creditworthiness, financial stability, and repayment records, they might approve the loan. Once they decide to sanction the loan, they would communicate the terms and conditions to you.
6.Disbursing the loan top-up
When the lender approves the loan, the additional funds would be disbursed to your bank account directly. Now that you have obtained your loan top-up, you can use the amount for the intended purpose. While most bike owners use the amount for repairs, upgrades, and maintenance, you reserve the liberty to spend the sanctioned amount for other purposes too.
What are the advantages of a two-wheeler loan top-up?
A two-wheeler loan top-up comes with a plethora of benefits. Let’s take a look at these advantages.
- Convenient application process: Most banks and NBFCs have streamlined the application process of loan top-ups. Thus, they have fewer document requirements, and the procedures are less complicated compared to traditional loans.
- Competitive interest rates: Often, creditors offer two-wheeler loan top-up at attractive rates of interest. Thus, it serves as a cost-effective loan refinancing option.
- Flexible repayment options: Different lenders offer top-up loans with varying tenures. As a result, you can enjoy adequate flexibility while repaying these loans based on your financial capacity.
- Boost your credit score: Repaying your top-up loan on time strengthens your credit score, streamlining your path to acquire larger loans such as automobile loans or home loans.
If you are having an existing two-wheeler loan and need to address urgent fund requirements, it’s wise to apply for loan top-ups. This would be a practical solution for you to manage costs like motorcycle maintenance, upgrades, paying for repairs, or purchasing insurance policies.
When you reach out to a reputed lender, the professionals would evaluate your creditworthiness and readily sanction the loan. In case you already have a rapport with your existing lender, they might also offer you a loan top-up. With careful planning and responsible repayment, you can remain stress-free while managing your finances.