We Indians want to own a vehicle, be it a car or a two-wheeler. However, not all people have enough cash to go and buy a bike in one go and settle with it. So, the best solution for this is to take a loan. With the passage of time, getting a loan for a bike is no longer difficult. Depending on your credit history, you get loans up to 85 per cent of the cost of the bike and in some places up to 90-95 per cent. This can help you buy a bike easily, and then repay the loan in affordable EMIs. But choosing the best bike loan for you is not an easy task. A lot of research is needed before choosing a loan that best suits your needs. We’ve compiled all the necessary information in the following article for you.

Subas Tiwari

It is important for you to know what documents will be required to take a bike loan. In the absence of the life and safety of the document, the approval of your loan may take longer wasting your time. Therefore, go collect all the necessary documents before applying for the loan. For loan approval, banks ask for different types of documents from the salaried person and the self-employed. Let us know what all are required for these two sections of loan applicants.

Documents for two-wheeler loans

Every lender requires you to submit certain documents while applying for a loan. Some of the general documents required are given below:

Tips for availing two-wheeler loan

A few loan applicants have had their applications rejected by lenders. This is not a pleasant feeling and it is not good for your credit score. We have put together a checklist that can help you apply successfully for a two-wheeler loan. These are as follows:

• Determine the exact loan amount required:You should assess your needs and calculate exactly how much money you need to buy the bike you want. You should never apply for an amount larger than what you need.
• Check your eligibility and compare your options:Once you decide how much money you need to borrow, take a look at all the loan options that you are eligible for. This is important. Never apply for a loan you don’t qualify for. This will automatically get your application rejected. Check your eligibility for a two-wheeler loan and make sure you fulfil all the criteria.
• Check your credit score:Your credit score is one of the most important factors that determine loan approval. Lenders usually reject applications with low credit ratings. So, if your credit history is poor, look at improving it before applying for the loan.
• Get a guarantor or co-applicant:If your credit score is not up to the requirement of the lender, see if you can get a guarantor or co-applicant. Having a guarantor or co-applicant who has good credit can help you get the loan you want.
• Fill your loan application properly:Make sure your application is fully filled with all the details your lender requires. An incomplete application or an application that has wrong information may be rejected.
• Submit all the necessary documents:While submitting your loan application, make sure you submit all the documents the lender requires as well. If you don’t submit the required papers, your application may be rejected.
• Try applying with your existing lender:If you already have a good existing relationship with a bank, try taking the loan from them. This good standing may help you get a loan even if you don’t fulfil all their criteria.

Keep in mind while applying for a two-wheeler loan

Now that you know how you can successfully apply for a two-wheeler loan, let’s check out what you need to keep in mind while applying for it. These points can help you find the right loan and avoid paying more than you should.

• Do your research well:This is the first step before you apply for a motorbike loan. Make sure you do your research well. Compare all the options that various lenders offer you. Compare interest rates, processing fees, repayment options, and other loan terms. This will help you find the best and cheapest option.
• Choose your tenure wisely: The tenure of your loan will determine how much you have to repay each month. Make sure you can afford your EMI. This means you have to be wise about choosing your tenure. A shorter tenure will help repay the loan faster. But your EMIs will be high. So, choose matching your affordability to pay off every month without facing a financial crunch.
• Choose an affordable interest rate:Your interest rate determines the overall cost of your loan. It also has an impact on your EMI. Choosing a loan with a low rate of interest can help keep your EMIs low. It will also make your loan cheaper.
• Compare floating rates versus fixed interest rates:Some lenders may offer you both floating interest rates as well as fixed interest rates. Floating rates change as per the changes in the market rates. Fixed rates remain constant irrespective of market rate changes. That said, floating rates are usually lower than fixed rates.
• Compute your EMIs before applying:When you compare your loan options, make sure you compare the respective EMIs as well. Choose a loan that gives you an affordable EMI with a convenient repayment period.
• Ask about prepayment fees:If you plan on prepaying or foreclosing your two-wheeler loan at any point, find out the charges for the same. Some lenders may charge you a fee for this while others may not. Prepaying your loan can help you save interest costs.
• Read the terms and conditions properly:This is also called the fine print. Read your loan offer document thoroughly and go through every single term and condition before you sign it. The fine print may reveal hidden charges and fees that may otherwise never be mentioned. Knowing these terms can help you avoid paying heavy penalties.

Do’s and Don’ts for Two-Wheeler Loan

Easy financing for superbikes

In India, the price of a luxury bike starts from Rs 5 lacs and it can go up to Rs 35 lacs or even more, depending on the model. Easy availability of finance from banks as well as non-banking finance companies for high-end two wheelers prompt customers to take up bike loans.

While 60-65 per cent of the customers buy bikes on loan, some of them may go for a superbike loan only to avoid questions from the tax angle and not because they cannot afford it. But there are also instances of people with a monthly salary of Rs 30,000 buying these bikes.

For banks, offering loans for high-end bikes is one way of getting high net worth individuals (HNI) as customers. Strangely, many banks offer loans for luxury two-wheelers at rates lower than that for standard two wheelers. However, the tenures may be longer due to high cost of the bike.

In some cases, the bank might not have an off-the-shelf loan product but could tailor one to suit the buyer’s needs. After all, someone who can afford to buy a bike of more than Rs 5 lacs could be a potential high net worth customer for the lender. The loan amounts are usually 70-80 per cent of the bike’s cost, but can also go up to 90 per cent, if the bank is happy with the customer’s profile.

People who buy high-end two wheelers do it more as a status symbol or for pleasure. But those who take loan for standard two wheelers are people who buy them for necessity, for their daily commute.

The market for high-end bikes in India is at a nascent stage, although it is growing. Harley-Davidson has tie-ups with some private banks. Triumph is the superbike from U.K and is financed by a few other private banks under a tie-up. Bucati is also a luxurious bike which is now sold in India. However, only a small percentage of customers opt for such loans.

While a large section of the demand comes from Delhi and Mumbai, cities like Bangalore, Ahmadabad and Chandigarh, too, have been excellent markets as a rich biking-culture already exists there. There is also an increasing demand from the south of India with Kochi, Chennai and Hyderabad where there is scope for a growing market for such superbikes.

What precautions/factors should one take before buying a 2-wheeler loan? As haste makes waste, any hasty decision could land you a two-wheeler which you feel like selling immediately while also could burn a hole in your pocket. Let us read on as to what they are.

Five steps to know if you miss paying your home loan EMI during this pandemic

The pandemic has hit the salaried employees gravely and a lot have lost jobs as well. In facing such tough situations, what if you miss paying the EMI of your home loan. Here is a guide that gives a heads up.

Subas Tiwari

Generally, the majority part of one’s salary goes to pay the home loan EMI and when that person has to suffer a job loss or salary cut, the EMI goes for a toss. And, the interest amount is added to your overall balance every month. Consequently, this increases the tenure of the loan as well as many more difficulties may come. If you face such difficulties, first of all, contact your bank and tell them about your situation frankly. The bank will certainly offer you an extension if your credit history is good and you have paid EMI regularly. The bank also has the right to extend the duration of your home loan, which will reduce the EMI.

Three to tango

The bank does not take immediate action if you miss one or two EMIs. Firstly, it will issue a notice if you miss three EMIs in a row. However, the bank will give you a grace period of two months for the last time to resume EMI if the borrower does not pay EMI for six consecutive months. Even after all these efforts, if EMI is not deposited, then the bank declares such loan as non-performing asset i.e. NPA. Now, the bank can seize your property and proceed with the auction process.

What is SARFAESI Act of 2002?

SARFAESI or the Securitization and Reconstruction, of Financial Assets and Enforcement of Security Interest Act of 2002 helps financial institutions, including nationalised and private banks, in securing the quality of their assets in a different way. Banks also use this Act for debt collection, on which a writ was also filed by the common people in the High Court and Supreme Court of many states.

This Act empowers banks to auction property of borrowers. Through this Act, the bank reduces the burden of its NPA. For this, the bank does not need approval from any court. But the bank first tries to ensure that the EMI starts again in some way. When all the options are closed, the bank moves further with the property auction process.

The borrowers have a chance to acquire their property until the day the bank announces the auction date. The borrowers can stop the process of this auction by making a payment to the bank. Apart from this, due to the announcement of the auction process by the bank, some charges will also have to be paid separately.

The SARFAESI Act is commonly used to recover the debt. As NPAs of banks continue to grow and loans were not recovered even after strict action against defaulters, the Act gives banks a form of force through which they can acquire their assets. Let us know some more about this SARFAESI ACT 2002.

Rights of banks under SARFAESI Act

The bank has the facility of money transactions, loans are also sanctioned by almost all banks. Money is issued from home loans to personal loans. According to the RBI guidelines, it is the responsibility of the banks to help common men financially. Arrange loans for them and they can also be given relief on delay in repayment of a loan. Not only this, but banks have also been explicitly instructed that they will give preference to lower-and middle-class people in loan disbursement.

Troubles of banks with the Act

The biggest difficulty of banks is that their NPA is increasing. In 2019, the NPA increased to around Rs. 10 lakh crore. Most of the NPA cases are related to loans. Banks have released money for loans to a large number of people, but their recovery has not been done. Many big industrialists are also involved in this, who have been declared defaulters due to inability to repay the loan amount. They have fled the country after securing loans worth billions of rupees from banks. Apart from this, loans were also sanctioned to promote small companies, development authorities, and cottage industries, but in most cases, banks have not been able to recover.

The attitude of banks for recovery

The SARFAESI Act gives a range of powers to banks. It also includes debt collection rights. It has been said by RBI that banks can recover their loans from people. However, banks have also been accused of misusing this law. In many cases, extortion was done by banks. The banks used to threaten the borrowers by reaching home and then dragging the vehicles in the case of personal loans. Lawsuits were also filed against them in the respective police stations, due to which the common people, who were unable to repay the loan, had to face many challenges.

Banks cannot mistreat borrowers using this Act

True that the SARFAESI Act 2002 gives banks the right to recover loans, but banks cannot mistreat borrowers for this. Recovery agents can go to people’s homes only between 7 am to 7 pm. Can talk to them. Consumers can adopt legal processes matching their needs. If any kind of misbehavior is done by the recovery agents, then customers can complain to the banks. In the absence of a hearing in the banks, the voice authorities can also be written.

SARFAESI Act 2002 for co-operative banks

The Supreme Court has said in a case that the SARFAESI Act will be applicable in co-operative banks as well and such banks are covered under it. Debt collection is an essential part of banking activity and this cannot be excluded from this Act. However, the court has also instructed banks to listen to the customers or borrowers before taking any action.