Two-wheeler sales are picking up after the pandemic. But in two-wheeled transactions, credit participation is relatively low compared to four-wheeled vehicles. Should you finance it or should you pay the full price up front?

Sumit Chhazed, co-founder and CEO of OTO, the two-wheeler finance start-up, told FE that insufficient funds should not prevent owning a two-wheeler, as there are many NBFCs and banks. ready to extend ready for two-wheelers. But the rates and services offered are different. So how do you choose the right lender for your two-wheeler?

Eligibility criteria

Chhazed said one has to go through the eligibility criteria carefully. The most commonly accepted conditions are residency (stable address and must be a citizen of the country for at least one year), age (must be between 21 and 60 years old, although some lenders may provide loans to the group of age 18 to 20). if a co-applicant is available), and Experian score of 600 and 650 in case of PIN (no proof of income).

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income status

Lenders can verify your income and employment status while providing a loan. “They are more likely to give a loan if you have a minimum salary of Rs 30,000 and the loan is only granted on presentation of a three-month pay slip for salaried employees and a pay slip of six months for the self-employed,” Chhazed said. . “However, there are special cases where those with a salary of Rs 10-12,000 can get a loan of Rs 1 lakh.”

Loan process

Banks and NBFCs offer a paperless process and instant loan approval. But the borrower should do detailed research regarding the turnaround time and required documents, and inquire with the lender about their loan process before applying for a loan. “Always choose the lender best suited to your needs,” Chhazed said.


The term of the loan for a two-wheeler can vary from 1 to 3 years. Some lenders may even offer a longer term (4-5 years). You can also complete it in six months, at a higher EMI amount.

LTV report

The LTV ratio breaks down the amount to be returned to equity in the form of a down payment on the debt. “Many financial institutions provide 90-95% of a bike’s value as LTV. The credit profile of the applicant is taken into account in this regard. A borrower should always check the LTV ratio so as to ensure that there is a good balance between the down payment and the amount taken in debt based on your repayment capacity,” Chhazed said.

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Interest rate

The interest rate is determined by the financial institution based on the term you choose and the individual’s creditworthiness. “You can expect 8-15% interest (flat rate) on a two-wheeler,” Chhazed said. “Compare the rates offered by different lenders and choose the one that offers the lowest interest rate.”

Additional charges

Some lenders may offer you a lower interest rate, but may ask you to pay additional fees in the form of a processing fee. “Be careful and read the fine print of the loan terms and conditions on late fees, processing fees and bounce fees,” Chhazed said.

Special offers

There are special offers from time to time, especially now that the holiday season is starting.

Customer service

Chhazed added that people often overlook customer service. “Choose a lender that has proactive customer service because you’ll likely have questions and need help throughout the loan repayment process,” he said. “With proper research, you can make your dream of two-wheelers a reality.”

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