Your dream two wheeler is not too far away with several bike loan options available in the market today. If you’re looking for two wheeler loan apply online on whichever lender’s website you want and the lender will process your loan application. However, before you do that, it is important to consider what the lenders assess in your loan application before they accept or reject it.
Here are some factors that a lender considers before approving a two wheeler loan:
Income of the applicant: The income of the applicant is the most important criterion considered by the lender in a 2 wheeler loan application. A borrower who does not have enough income to repay the loan within the loan repayment tenure will not get his application accepted. This is why lenders generally recommend making a joint loan application because in a joint bike loan application, the income of all the joint applicants is considered.
Credit score: The credit score is a snapshot of the repayment history of the borrower. It shows the payments for credit cards, repayments on loans etc. When a lender receives a loan application, they make a request with the credit bureau for the credit information of the applicant. This is why it is very important to make limited loan applications. Too many hard requests for credit information can damage your credit score.
Make and model of the two wheeler: Another factor affecting a 2 wheeler loan is the make and model of the two wheeler. Different models have different costs as well as a different record in the market with regards to accidents, road safety issues, fuel efficiency, percentage of breakdowns etc. The lender will assess this before approving a bike loan application.
Outstanding loans: Lenders generally look at any outstanding loans that the loan applicant has before approving a bike loan application. This is because outstanding loans already have a charge on the applicant’s monthly income. Lenders usually do not consider applications where existing EMI servicing exceeds 50% of the applicant’s income. This is because the applicant will also need income to meet monthly expenses and there is a higher chance of default in such a case.
Repayment period: A longer repayment period is generally not preferred by lenders unless the loan applicant has sufficient income and investments to give the lender comfort that the 2 wheeler loan will be repaid in the future. If the repayment period is very short, the lenders will again not approve the application unless the applicant has income high enough to meet the EMI costs.
Prior relationship: If the applicant already has a relationship in any form with the lender either through an existing or closed loan, or a credit card holder or any form of banking relationship, the lender has some experience or data to study the past history of the borrower. This information comes in handy while deciding the bike loan application. For applicants who generally do not keep a high account balance or have a lot of expenses, the loan application can get rejected.
Purpose: The purpose for which the two wheeler is being purchased is extremely important. If the applicant is a sales person who needs to use the vehicle very frequently, the lender will view that loan application differently as compared to a person who uses the vehicle infrequently.
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