FAQs

Take a look at some of the most commonly asked questions regarding two-wheeler loans.

Q) How can I apply for a two-wheeler loan?

There are different ways of applying for such a loan:

• Directly applying at the physical branch office of a lender.
• Applying online.
• Applying at the time of purchasing the bike (at the showroom).

Q) When should I take a loan to buy a bike or scooter?

This depends on how much money you have of your own. If you can finance the entire amount by yourself, don’t take a loan. But if you have only a part of the money, you can apply for a loan for the rest of the bike’s value.

Q) Can I get a loan to fund the whole value of the vehicle?

The answer to this depends on the lender from whom you take the loan. Most lenders will offer you a loan for only up to around 80% to 90% of the value of the vehicle. You will have to bring in the rest of the money on your own. That being said, there are a few lenders who offer 100% financing. However, this may come at the cost of additional terms and conditions.

Q) What costs will a scooter or bike loan cover?

Most lenders offer loans that cover accessories, insurance, and registration charges for your vehicle. In addition to this, you may also get additional perks if the lender has a tie-up with a particular two-wheeler brand.

Q) Should I take two-wheeler insurance when I buy a bike? Is it mandatory?

Yes, insurance is mandatory when you buy a vehicle. The showroom you buy from will not release your vehicle until you pay the insurance as well. This is usually built into the total on-road cost of your bike.

Q) Should I choose a floating interest rate or a fixed interest rate?

Sometimes, banks may offer you the choice of a fixed or floating interest rate. A fixed rate remains constant irrespective of market rate changes. A floating rate changes when the market rate changes. People usually prefer taking floating rates because they are lower than fixed rates.

 Q) What tenure should I choose?

The tenure you choose determines your EMI. A longer tenure will make your EMIs more affordable. But you will also be in debt for a long time. Shorter tenures result in higher EMIs, but you’ll be able to pay off the loan faster.

Q) What is two-wheeler loan prepayment? How does prepayment help?

Prepayment is paying an EMI or multiple EMIs together before the amounts are due. Every time you prepay a part of your loan, it helps reduce the outstanding principal. This reduces your interest cost as well. So, prepaying your loan can help you save money.

 Q) Is there any fee for prepayment?

Some lenders may charge you a fee when you prepay your loan while others may not. Before prepaying your loan, find out what it will cost you. If the costs are covered in the interest you save, then go ahead and prepay your loan.

Q) Should I offer collateral when I take a loan to buy a 2-wheeler?

No, you don’t have to offer collateral when you take this loan. The vehicle acts as collateral till you repay the loan in full. This is called hypothecation.

Q) What will happen if I am not able to repay my loan on time?

If you don’t pay the EMIs on time, the bank may repossess your vehicle. Since your bike or scooter is hypothecated, the bank has every right to confiscate your vehicle to make good the losses they suffer.

Q) Can I sell my bike before I repay the loan?

No, you cannot. Since your bike is under hypothecation, you cannot sell it till you get an NOC from the bank stating that you’ve paid back the loan in full.

 Q) What should I do after I repay my loan?

Once you pay the final instalment and terminate your loan, you should follow the steps given below:

• Get the No Objection Certificate (NOC) from the bank.
• Get Form 35 from your lender and fill it up.
• Get your trade certificate.
• Submit your application at your Regional Transport Office (RTO) along with the documents mentioned above and your original Registration Certificate (RC), and copies of your driving license, PUC, insurance, and Aadhaar card.
• Pay the required fee and follow the other instructions at the RTO.
• Go and collect your new RC on the given date.

Q) Can I get a loan if I’m a student and have no income?

Yes, you may be able to get a loan if you’re a student. In such cases, you can get a co-applicant such as a parent or a close relative to guarantee payment on your behalf. Do keep in mind that not all lenders offer loans to students.