The maximum number of people in our country runs on a two-wheeler. But after introducing the internet in the early nineties and the official use when it got increased, the online way of shopping and purchasing has increased a lot. In return, the purchase of the two-wheelers has got a positive slope and is still going on.
There and always an important question that arises in the mind of the loan borrower or the applicant. The question is how a credit score influences the procedure of the two-wheeler loan and vice versa.
First of all, to know the same concept, one will have to go through the proper meaning of the credit score. A credit score is nothing but a three-digit number generally prepared and issued by credit rating agencies or bureaus. Through the credit score information, a loan provider gets the exact and accurate information about all the types of loans availed in the past by an individual. It is preferred by most of the banks, and nbfc is that if a person has a positive credit score, that is a high rate of credit. If a person has nearly 700 for 800,, he will be given the full fever to receive loan approval for the two-wheeler.
A credit score is an important thing based on which the rating calculation depends. The first and foremost thing which comprises the top part of the credit score is the payment history. It generally covers all the style or the pattern based on which it availed all the types of loans, how it has been paid or has been handed will be checked to provide the approval for the loan. The most important thing is the current debt, or any credit loan service is already going on now. Then the next turn comes for the length of the tenure period, which means for how much period or months or year the loan was granted. Then the two other components, that is, the new credit and the credit mix, contribute about 10%and 10% respectively.
Bad payment behaviour
- An important factor that influences the credit score while availing two-wheeler loans is the bad payment behaviour during the loan repayment. From the different kinds of service, it has been noticed that a 30 days delay in the repayment period reduces about 100 points in the credit score, which will be very tough to regain by following the proper repayment rules of a new loan. Bank of Baroda two wheeler loan offers better facilities to the customers. Most of the time, it has been noticed that people use multiple credit cards at a time. It does forget to manage it properly as they do not have an intention of paying it properly with proper reminder alerts, and this is the reason due to which they miss the due dates of the payment and take a hit as it adds two different types of penalties or charges along with the exponential rate of interest.
The tenure of the loan
- The loan's tenure period plays a vital role in influencing the credit score in a two-wheeler loan. For example, suppose the two-wheeler loan is an event for the return of 5 years or more. In that case, there will be a maximum number of which will include interest as well as repayment principal, but in this case, the rate of interest which will be charged which means the value of the interest amount total collected will be much more than that of a two-wheeler loan availed for three years. This will eventually increase the cost of the borrowing of the two-wheeler loan. At the same time, on the other side, there is cutthroat competition in the market where some of the financial institutions will offer the same tenure period at a low rate of interest to attract the customer who is involved with the other financial institution.
Conclusion
High credit utilisation ratio, outstanding debt, and payment of the minimum amount also play a vital role in influencing the credit score while travelling for the two-wheeler loan. the income source capacity of the loan applicant also checked as besides the the two-wheeler itself, the income is the source with which the loan repayment EMI is will be paid each month
