Considering seeking bike finance but worried about the down payment? Assessing the down payment that you would have to pay from your pockets even after taking a loan to finance your two-wheeler vehicle is not a new affair. This is because most lenders offer a loan amount up to 80-85 per cent of the on-road price of the vehicle, thus, leaving the inclined borrowers to pay the rest of the amount by themselves. However, many financial institutions offer 100 per cent financing, thus, allowing their customers to buy their choice of two-wheeled vehicles like scooters, bikes, etc. without having to pay anything upfront.
Seeking two-wheeler finance is common among most Indian households. This can be attributed to millennials’ love for dream bikes or the ease of convenience in driving around in two-wheeled vehicles, especially, on Indian roads packed with traffic and dotted with gaping potholes. Moreover, affordable interest rates on bike finance availed by lending institutions coupled with easy repayment options over flexible tenures have made it easier for inclined borrowers to avail these loans.
Making Minimum Down Payment
It is common to opt for a lender that agrees to lend the full amount of the vehicle’s on-road price, thus, leaving nothing to spend on the down payment. The down-payment amount depends on the price of your vehicle and the loan amount availed. Though zero down payment facilities are available, it helps to apply for the loan amount that is needed while paying the rest from your pocket. Lower loan amount translates to a reduced value of the equated monthly instalments (EMIs) during repayment.
Factors Affecting Down Payment
While applying for two-wheeler finance, the aim is to seek a loan that can be repaid through easy instalments. Apart from the cost of your two-wheeled vehicle, other factors affecting your down payment amount include your credit score and your ability to repay the loan.
Having a CIBIL score convinces your lender about your ability to repay your loan and zero risk of default, thus, allowing them to sanction a higher loan amount at lower interest charges. Good credit score stems from a continued and impeccable track record of repayment of loans and credit card debts. This means that in the event of a favourable credit score, you can ask your lender to avail you the full value of two wheeler finance.
Existing customers benefit from lower interest charges, thus, making loan repayment easier. Also, existing customers with high credit scores get pre-approved loans that they can use for bike financing. However, inclined borrowers must be working for a minimum one year before availing the loan facility.
Most lenders have a loan EMI calculator on their sites. Filling in details including your desired loan amount, interest rates and desired loan tenure helps you estimate the loan EMI that you must pay. Also, these calculators factor in added charges like processing fees, thus, enabling a correct evaluation of the loan amount to be repaid throughout the loan repayment period. These processing fees charged at the time of loan processing request or prepayment penalties during loan foreclosure are charged as a percentage of the entire loan amount and are non-refundable.
A higher two-wheeled loan amount is imperative to minimal down payment facility. However, this is possible only when inclined borrowers submit full and correct documentation. While making the loan application, you must submit documents proving your identity and proof of residence. As identity proofs, you may submit your PAN Card, Driving License, etc. For address proofs, you may submit Aadhaar Card, Voter ID Card, utility bills, Passport, etc.
Many lenders also seek income proofs from their customers, be it salaried or self-employed. While salaried customers may submit their salary slips over the past three months or bank statements showcasing financial transactions over the past five months. The self-employed or businessmen can submit their income tax returns (ITRs) filed over the past two years, fund flow statements showing their incomes and expenses of their businesses along with audited financial statements of their firms.
Also, the details in the loan application form must be filled correctly to avoid rejection of the loan application. False declaration through documents or incorrect attachment of the documents corresponding to the details sought will only impede the loan application process.