An SBI two wheeler loan application is quite a simple one that can be completed online or by visiting RBL bank branches This loan offers various benefits for the borrower. A CIBIL Score is an important factor while obtaining any loans as a Credit union devises this score. There are no specific rules which imply that an individual with a poor credit profile can’t obtain a loan. Usually, a high-interest rate is incurred as it involves the risk of repayment of the debt. This Score is assessed by every bank or NBFCs while obtaining a two-wheeler loan measured on the scale of 100-900, and 700 is termed as excellent and is valid up to the span of 10 years. A good credit profile shows the candidates creditworthiness and good debit history. A steady income and a good profile are considered a good candidate in the loan approval process.
A CIBIL Score less than 650 is termed a bad credit score, and less than 450 is poor. These scores can have a negative impact on the credit report of the individuals. The few causes which can lead to a poor credit report is late or deferred payments, too many credit enquiries, credit card dues, debt consolidation.
Late or deferred payments - A late repayment or missed repayment can cause harm to the credit score with a surplus interest charge on the subsequent payments. An individual should maintain regular repayments of the debt. Deferred repayments are the worst worst-case scenario for your credit score. Failure to make even one payment might result in a skeptical assessment of your overall score.
Too many credit enquiries- While obtaining a loan, banks and NBFCs request credit unions to analyze your credit report. This enquiry is mentioned in the report with the date. If the lender sees multiple enquiries around the same time, it can have a bad impression as too much eagerness for obtaining a loan. This can lead to loan rejection.
Credit Card dues- A credit card is a beneficial option to use instead of cash while making a purchase. Nevertheless, its repayment has to be made monthly. If one doesn’t make regular repayments, then a colossal amount can be accumulated as due, which can cause a financial burden upon the individual and thus negatively impact the credit score.
Debt consolidation- If an individual has already a prevailing debt and wants to obtain another loan, the bank estimates your past transactions and debt repayment. It also analyses your repayment capability to ensure that you are credible to repay the existing debt with a loan you applied for. Any past missed repayments can lead to loan rejection.
There are some ways to overcome this situation to improve your credit score, such as having a cosigner, Examining various lenders, offering better lending terms while obtaining a two-wheeler loan.
Cosigner- A Cosigner or guarantor helps in securing the loan. As the debt obligations depend on the cosigner or guarantors shoulder when the borrower fails to make the repayments. The creditworthiness of the cosigner or guarantor is taken into consideration and is liable to repay the debt. Suppose the cosigner or guarantor refuses to make the repayments when the borrower is deceased or unable to pay. In that case, the bank has the authority to take legal action against him/her and impact the credit profile.
Examining various lenders - an individual must do market research to better deal with less interest rate and processing fee with a wider tenure for a two-wheeler loan. Nowadays, lenders are assessing the borrower’s background and income to qualify them as an eligible prospect. A lenders creditworthiness should be examined before obtaining a loan.
Offering better lending terms - There are a variety of conditions that may have led you to make a mistake on a previous loan and may still have an impact on your credit score. Even though the interest rate is somewhat higher, it is usually advisable to negotiate acceptable credit conditions with your lender.
Also read this: Two wheeler loan charges and expenses