Two-Wheeler Loan Process
What is a two-wheeler loan?
A two-wheeler loan is a loan taken from the bank to buy a two-wheeler.
There are mainly two types of two-wheeler loan -
Secured :
As the name suggests, here, the bank will take some asset or your two-wheeler as a security or collateral against your loan. So if you're unable to pay the loan amount, the bank will seize your two-wheeler and sell it to recover the loan amount.
Unsecured :
These types of loans are not secured, so you don't have to give any asset as collateral. But instead, you'll have to maintain a good credit score to be eligible for this loan. Banks provide an unsecured loan based on credit scores. So if your credit score is bad, banks (like Bank of Baroda Two Wheeler Loan) will reject it or ask for a high-interest rate.
The process to apply for a two-wheeler loan -
There are several steps that you'll have to follow to get your loan approved by the bank:-
- Application :
The first step is to fill the form given by the bank. You can even find the paper online on the bank's website. You'll have to go to the personal loan page and click on the 'Apply Now button. And once you do that, you'll be redirected to the application page. So fill in all the necessary details. - Documentation :
The second step is to attach all the documents required by the bank. They usually ask for three types of proofs:- Identity proof:- So for this, you'll have to submit documents like an aadhar card, pan card, driving licence and passport. Because these documents will verify that you're a citizen of India.
Address proof - For this, you'll have to submit documents like telephone bills, electricity bills and other utility bills.
Income proof -
Banks only give two-wheeler loans to someone who is employed. So you'll have to provide your income proof to show that you are employed. The documents that you'll have to submit are; bank statement, payslip, form 16, ITR, Tax Challan or any other document that shows your monthly income. - Verification :
After you've attached all the necessary KYC documents. You'll have to submit the form to the bank. You'll also get the option to choose the interest rate, loan tenure and loan amount at this stage. So plan your budget accordingly and choose the best option for you. - Disbursal :
Once the bank has verified your documents, you'll be declared as an eligible applicant for a Two-Wheeler Loan. And the loan amount will be credited to the dealer's bank account. Some banks give DD (Demand Draft) or cheque to the dealer. And if you've selected the secured loan option, the amount will be credited to your bank account.
Tips -
We've listed some tips below to get a two-wheeler loan at a low-interest rate :
- Compare banks and choose the one you think will give the lowest interest rate.
- Negotiate with the bank. And check if you can lower your interest rate. If you have a good credit score, that will help you lower your interest rate.
- Don't apply if you have multiple loans at the same time. Because if you're unable to pay one monthly instalment of either of them, you’ll have to pay extra charges, and it will also affect your credit score. So be sure that you get rid of all the previous debts or loans you've taken.
- Choose a bank that gives you flexible repayment options. And some banks give you the flexibility to plan the repayment structure of your loan amount.
- Choose short-term loan tenure because you might end up paying more than your loan amount if you opt for a long term.
Conclusion -
Look at a lot of options before deciding on one. Think, compare and then choose the one that fits according to your needs. You can even take help from loan consultants, and they'll compare all the banks in the market for you and choose the one according to your need.
