Two-wheelers come in various forms – from basic entry-level commuter bikes to high-end speed demons. Lately, electric two-wheelers are seeing a surge in sales due to their long-term benefits for the environment and cost savings in the long run. Naturally, based on the type of two-wheeler, the price can vary from ?50,000 to ?80 Lakhs. People often take a bike loan to buy the vehicle of their choice. This eases the immediate financial burden and allows them to repay the amount in EMIs over the course of 3-5 years. 

The lenders are taking a financial risk when they loan the money. They have established a set of conditions for two-wheeler loan eligibility to minimise this risk. People who rank higher on this checklist tend to get more attractive interest rates, terms, and more flexible repayment tenors for their bike loans. Before we understand the key two wheeler loan eligibility criteria, let us first take a look at the key factors that affect your loan rates.

Credit Score
Your CIBIL score or credit score is one of the most important factors that directly impact the two-wheeler loan eligibility criteria. The score reflects your financial report card vis-a-vis the credit products (like loans, credit cards, etc.) you have availed of and your punctuality in repaying the amounts. A score of 750 and above is considered a good score, with 900 being the highest. You should check your credit score before applying for a bike loan.

Outstanding Loans
Your credit history also displays all existing loans against your name. Lenders will consider you a risky borrower if your ongoing debts exceed 60% of your net monthly income as your financial resources are already stretched. 

Monthly Income 
Most lenders have a minimum monthly income as one of the key two-wheeler loan eligibility criteria. They prefer borrowers who have a steady flow of income and have been gainfully employed for a while. Generally, if you have a higher income, you are likely to get more attractive rates. An income of ?10,000 per month is the bare minimum requirement for most lenders.

Cost and Type of Two-Wheeler Being Purchased
The type of two-wheeler you intend to buy also has a bearing on the loan rates. Custom bikes, for example, are less appealing to lenders due to their low resale value. On the other hand, electric bikes are being promoted by the government. Hence, you are likely to get better bike loan rates for them. The overall cost of the two-wheeler and the down payment you are willing to offer also affect the eventual rates you are likely to be offered. The general rule is the higher the down payment, the better the rates.

Two Wheeler Loan Eligibility Criteria
The eligibility criteria are likely to vary from one lender to another based on the respective organisation’s policies. However, in general, here are the most common two-wheeler loan eligibility requirements.

• Age: Between 21 and 65 years.
• Minimum Salary: ?10,000 per month.
• Employment Status: Salaried applicants with an employment duration of at least one year. Or, self-employed people with income tax returns filed in the recent two financial years.
• Residence: Should be a citizen of India and residing at the current address for at least one year.
• CIBIL Score: 750 and above. It is not to say that people with a score less than 750 are not eligible to apply for a bike loan, but they are likely to receive higher rates and stringent terms of repayment.

How To Improve Your Two-Wheeler Loan Eligibility
If you have your heart set on a two-wheeler but are not eligible or are low on the loan eligibility checklist, here are some measures that can help you in securing a bike loan and increase your chances of getting better rates.

Improve your credit score: Ensure timely repayment of existing EMIs and credit card bills. Avoid any missed payments or defaulting on the amount as it can severely harm your credit score and can take years to bring it back to a favourable level.

Have a stable source of income: Lenders are likely to check your payslips or recent tax returns to ensure you have the financial capability to pay your EMIs each month. Applying for a bike loan with a stable source of regular income will bolster your chances of securing it.

Maintain a low debt-to-income ratio: Lenders will doubt your ability to repay the bike loan if you already have several loans or outstanding debts. Aim to clear outstanding dues at the earliest and maintain a debt-to-income (DTI) ratio of under 40% to go up on the two-wheeler loan eligibility criteria.

Make a down payment: Most lenders offer a loan up to 80-90% of the on-road price of the two-wheeler, while some may offer full financing as well. If you make a down payment of 30-40% of the price, your loan value will reduce and lenders will gain confidence in your ability to make EMI payments on time. 

Conclusion

The internet has made securing a two-wheeler loan quite simple and convenient. Now that you know the two-wheeler loan eligibility, you can prepare better and boost your chances of getting a bike loan to buy the two-wheeler of your dreams. Always compare the rates and terms of different lenders before making your decision. You can visit Bajaj Markets to apply for a bike loan at nominal interest rates and favourable repayment terms.