How to Apply for a Bike Loan? Refer to this ultimate step-by-step guide!

By Ramesh, content writer | Friday, 28 October 2022, 06:30 Hrs

According to a report published by CRIF for FY21, more than 95 percent of the market share for two-wheeler loans belongs to private banks and NBFCs. Furthermore, more than 75 percent of the purchases are funded by loans. With two-wheelers becoming the preferred mode of commute for most Indian households, banks, captive financiers and NBFCs have made it relatively simple to secure a two-wheeler loan. Additionally, the two-wheeler loan market in the country is expected to exceed USD 12 billion by 2025, underlining the importance of bike loans to the citizens.

A two-wheeler loan application entailed several steps and procedures a few years ago. From lengthy documentation to long processing times, you had to wait several weeks to learn about your application status and the subsequent loan disbursal. Today, however, the entire process has been streamlined and digitised. Several lenders process your loan application within 72 hours, and the loan amount is sanctioned within a few days. If you are interested in learning about the best two-wheeler loans, here is a comprehensive guide to help you apply for a bike loan.

Comparison of extant bike loans

Before selecting a lending entity, ensure that you research and select a lender that offers the best rates while applying for a two wheeler loan for your needs. This includes a nominal interest rate and processing fee, up to 100 percent financing of the bike's on-road price and a flexible repayment period. Typically, lending institutions offer interest rates ranging from 8.3 percent to 28 percent, while the tenure ranges from 1 year to 5 years. Understand your requirements and choose a lender that provides you with the best loan terms.

Know about the two-wheeler loan eligibility criteria

It is essential that you are aware of the two-wheeler loan eligibility criteria before starting your loan application process. The common determinants include:

Age: You must be at least 21 years old and shouldn’t be older than 65 by the time the loan tenure expires.
Credit score: Most lenders expect you to have a credit score of 750 or above, although the minimum credit score mandate varies from lender to lender.
Employment status: You must either be a salaried employee or self-employed.
Monthly income: The minimum monthly income requirement differs from one lender to another, but you should earn at least â‚¹10,000 per month.

Documents required to apply for a two-wheeler loan

You have to submit a few KYC documents while applying for the loan. It is wise to learn about the documents needed to successfully submit your loan application.

Identity proof: You can submit copies of your Aadhaar Card, PAN Card, Passport, Voter ID or Driver’s Licence as your ID proof.
Address proof: Your Aadhaar Card, PAN Card, Passport, Voter ID or utility bills can serve as your address proof.
Photograph: You have to submit two recent passport-sized photographs.
Income proof: If you are a salaried employee, you can submit your salary slips, latest ITR and bank statement for the previous three months. If you are self-employed, you can submit your bank statement for the last three months, ITR for the previous two years and audited financial statements.

Use the Bike EMI Calculator

To zero in on the best two-wheeler loan, you must strike the right balance between the principal amount, interest rate and repayment period (tenure). This will help you calculate your EMI amount, which you can pay monthly without disrupting your budget. You can calculate the ideal loan amount using a bike EMI calculator, which you can find on the lender’s and loan aggregators’ websites. You have to enter the loan amount, the interest rate being offered and the tenure (in months). Alternatively, you can use this formula to calculate the EMI amount.

EMI = [P x R x (1+R)^N]/[(1+R)^N-1]

Here, P represents the principal or loan amount, R is the monthly interest rate and N is the loan tenure (in months).

Before applying for the loan, you should consider additional fees and charges, such as file charges and processing fees. The best two-wheeler loans come with nominal processing fees.

Application process

Once you know the two-wheeler loan eligibility criteria, documentation requirements and the terms you are comfortable with, you can search for a lending entity that offers the best two-wheeler loans. Afterwards, you can apply for the loan online or visit the lender’s office. Here is how you can apply for the loan online.

Step 1: Visit the lender’s website
Step 2: Click on ‘Apply Now’
Step 3: Fill out the online form and provide basic details, such as your personal information and employment status
Step 4: Select the two-wheeler model you wish to purchase and the loan amount you require
Step 5: Submit the details, and a representative from the lending entity will get in touch to take things forward

You will also have to upload KYC documents during the application process, and once the loan application is approved, the loan amount will be sanctioned and sent to your bank account. Typically, the entire process won’t take more than seven working days.

Lenders such as Bajaj Markets provide up to 100 percent funding of the bike’s on-road price, which covers RTO and insurance charges. The application process is streamlined, and you can get highly competitive interest rates. Moreover, you can repay the loan amount according to your convenience, with tenures extending up to 60 months (5 years). With foreclosure options and pocket-friendly instalments, you can avail of the best two-wheeler loans from Bajaj Markets.