Vehicular loans usually cover part of the cost of the vehicle, with the initial lump sum toward the vehicle being paid by the buyer. However, sometimes the financier can agree to pay out 100 percent of the vehicle’s value as a loan. Is it possible with a bike loan? How can one apply for a bike loan without having to pay any down payment at all? Let’s understand this one step at a time.
What is a Down Payment?
Two-wheeler loans usually comprise of two components – the ‘down payment,’ which is the initial lump sum that the buyer pays the dealer, and the loan amount, which is applied for by the buyer (sometimes with the help of the dealer) and is sanctioned by the lender and disbursed after approval to the dealer. The buyer then repays the lender via EMIs that include the interest amount.
Why Choose a Zero Down Payment Two-wheeler Loan?
You may not prefer a down payment because, for one, it eats into your savings. Secondly, if you intend to accessorize your two-wheeler with aftermarket accessories, you’ll have to fork out extra cash. You might not even be able to buy that dream helmet to match your shiny new bike if your down payment is demanding enough! Lastly, if you want a new two-wheeler and plan on going on a long trip, it might be impossible until you’ve rebuilt your savings after paying that draining down payment. This is where a zero down payment two-wheeler loan can come in handy—it leaves more cash in your pocket at the time of the purchase, with which you can choose to do many things, some of which have been mentioned here.
How to Apply for a Zero Down Payment Two-wheeler Loan?
The procedure to apply for a zero down payment two-wheeler loan is not any different compared to a standard two-wheeler loan. However, your standard two-wheeler loan eligibility might not be enough to meet the requirements for a zero down payment two-wheeler loan, as the amount applied for will be higher. As the loan will cover the entire cost of the vehicle, the risk is higher for the lender as well – so you might find regular two-wheeler loan interest rates more appealing.
Here are some of the criteria to be eligible for a zero down payment two-wheeler loan:
- The applicant’s income must be relatively high, at around ₹10 lakh gross earnings per annum for salaried individuals. Self-employed individuals might be approved with a slightly lower gross income amount.
- The applicant’s credit history needs to be very good. A score above 800 is excellent, but a score of 750 and above might cut as well.
- Your current EMIs will play a role in the financier’s decision. If the entity feels you will stretch yourself too thin financially with the two-wheeler loan (the EMIs will be bigger due to the zero down payment component), your application will be rejected.
- Some lenders require the applicant to be at least 21 years of age; others will accept 18 years and up. All of them need the applicant to be 65 years old when the loan tenure ends.
- Holding on to a job for more than a year and living at the same location for more than a year will help bolster your case for the two-wheeler loan.
- A bank might be conducive to offering lower two-wheeler loan interest rates if the applicant holds an account with them.
Not all lenders have the same eligibility criteria for a zero-down payment two-wheeler loan, so check the exact requirements of the lenders you consider. Remember to apply to only one lender at a time to ensure your credit score doesn’t dip. You can apply for a zero down payment two-wheeler loan in one of the two ways: online, by uploading scans of the required documentation on the lender’s website, or by applying for the loan in person, either at the vehicle dealership or at the lender’s offices. If you meet or exceed all the eligibility criteria, your two-wheeler loan will be disbursed very quickly, and you can ride off on your dream two-wheeler! Given the pandemic, an online application might work the quickest.