With risein disposable income, especially in rural areas, there has been a steady increase in two wheeler sales, made easier by quick availability of finance to help people buy such vehicles.
Banks and Financial institutions offer easy credit on attractive interest rates, with some of them offering finance up to 95% of the cost of the vehicle, making them available to most borrowers. While all these sound very encouraging, care needs to be taken to avoid one’s application for a two wheeler loan from being rejected. Some precautions to be takenare as under:
- Eligibility
Lending institutions are very strict about issues of eligibility such as age, regular income by way of salary/business. Age ranges from 18 to 70 years and a minimum income that should take care of repayment of the EMI which may extend up to 60 instalments. While employed youngsters are eligible at 18 years, those in business are expected to be 21 at the time of loan application.
- Income
Most borrowers seeking two wheeler loans are young with a steady job with good companies. While some lending institutions specify a minimum salary and a 6-month job history, for those in business, the tenure prescribed is two years and an ITR for previous two years.
- Documentation
All lending companies prescribe a minimum set of documents such as identity proof by way of pan card, Aadhaar, address proof and demand salary slips or ITR for those in business. Some lending institutions maintain a list of reputed organizations and an employee from these organisations could get speedy sanction and even preferential rate of interest.
- Repayment capacity
All prudent lenders of loans will ensure that loans are repaid on time and towards that will check the creditworthiness of the borrower, starting with his credit score and check for other liabilities by way of EMIs and other payments which could prove to be a burden, leading to default in EMI payments. Most lenders take post-dated cheques and/or opt for direct debit to bank accounts. Even disbursal of the loans is directly to the dealers to avoid any misuse of the sanctioned amount.
Having mentioned the above as points to be noted while applying for a two wheeler loan, it is obvious that any deviation from the laid down procedure will lead to the loan application getting rejected.
Recently there was the case of a working youngster who was assured of speedy sanction of the two wheeler loan he had applied for. When he made enquiries as no sanction came even after a few weeks, he was informed that his loan has been rejected as his monthly salary was below the minimum prescribed by the lender which somehow escaped the attention of all those dealing with the borrower.
Many lending companies have started the practice of online applications where if all the required information is given, the borrower gets an indication whether the loan will be sanctioned and he / she can then upload the necessary documents and obtain quick approval.
