Question 1

How is bike loan EMI calculated monthly?

Accepted Answer

EMIs or Equated Monthly Installments refer to the monthly payments you make to the lender to repay your bike loan. These payments include the principal amount as well as the interest i.e. EMI = Principal Amount + Interest on Principal amount. Mathematically, EMI can be calculated using the following formula:{P x R x (1+R)^N / [(1+R)^N-1]} where, P = Principal amount of the loan, R = Rate of interest and N = Number of monthly installments.

Question 2

What are the documents required to apply for bike loan?

Accepted Answer

To process your bike loan application with the selected lender, you would be required to submit your KYC documents, which include your identity proof and current address proof, a copy of your PAN Card, your bank statement and your income proofs (Form 16/Salary Slips/ITR). You can get the exact requirement from your loan consultant after applying with us.

Question 3

What is the minimum down payment for a bike loan?

Accepted Answer

The lenders generally finance 90% of the ex-showroom price of the bike. Some customers might be eligible for 100% funding too. This means the minimum possible down payment that you have to pay includes the RTO and insurance charges for the bike. Down payment is the difference between the on-road price of the bike and the amount funded by lender.

Question 4

What will be the tenure for which I can avail bike loans?

Accepted Answer

Most lenders offer bike loans for tenures ranging from 1 year to 3 years. You can choose the loan tenure as per your preference. Some lenders like Corporation Bank, Canara Bank, etc. also offer bike loans with tenure up to 5 years.

For a longer tenure, EMIs will be lower but the customer will end up paying more interest against the loan amount and for a shorter tenure, EMIs will be higher and the customer will end up paying lower interest against the loan amount. So, if the customer is getting a loan for 4-5 years and doesn’t want to commit to a higher EMI then he should choose a loan tenure for 4-5 years.

Question 5

What will be the rate of interest on a bike loan?

Accepted Answer

The interest rate for primarily depends on the principal amount and tenure of the loan amount. Interest rate of lenders generally varies from 9.7% per annum to 15% per annum.

Question 6

What will be the charges if bike Emi is missed?

Accepted Answer

Whenever any EMI is missed, financiers charge the late payment fee which varies from financier to financier.

Financiers generally charge 2%-3% pm of the unpaid installment

Question 7

What are the maximum years for a bike loan?

Accepted Answer

Most lenders offer bike loans for tenures ranging from 1 year to 3 years. You can choose the loan tenure as per your preference. Some lenders like Corporation Bank, Canara Bank, etc. also offer a bike loan with tenure up to 5 years.

Question 8

What if I pay more amount than EMI for a bike loan?

Accepted Answer

When you are paying off a part of the bike loan by making larger payments than the EMI, before the end of the tenure, then it is called part prepayment. By part prepayment, your principal outstanding will be reduced and also reduce your future EMIs.

Some financiers such as ICICI Bank does not allow part prepayment of the bike loan whereas some financiers like HDFC Bank allows it after a fixed interval of time with a part prepayment charge.

Question 9

What is the difference between fixed-rate and floating-rate for bike loan?

Accepted Answer

Fixed Interest Rate: Fixed Interest Rate allows the repayment in fixed equal monthly installments over the entire period of the loan. The interest rates in such a case are fixed and don’t change with market fluctuations. Thus the borrower knows the exact amount he needs to pay in the future or at least he knows the exact interest rate to pay for the outstanding loan at that time.

Floating Interest Rate: Floating interest rate, which is also referred to as variable or adjustable interest rate is any debt instrument that does not have a fixed interest rate. The time period for a bike loan plays an important role in deciding this fixed percentage. The borrower decides the time period and the lender charges the interest rate accordingly. This period generally ranges from 1 month- 5 years

Question 10

How can I make my loan EMI payments?

Accepted Answer

After the bike loan is approved, a customer will have to sign an agreement including a NACH (National Automated Clearing House) form, a centralized system implemented by National Payments Corporation of India (NPCI), launched with an aim to consolidate multiple ECS (Electronic Clearing Service) systems running across the country allowing paperless debit transactions between banks.

Getting into such an agreement would mean that the customer has granted permission for auto-debiting of the EMI amount from his bank account on a date as mentioned in the agreement till the last EMI of the loan amount.

Question 11

What should be done after paying the last bike loan EMI?

Accepted Answer

A number of borrowers assume their job is done after paying off the last equated monthly installment (EMI) on their bike loan. But, there are still some unfinished tasks left for the borrower. After completing the repayment of your bike loan, there are five important things that you need to do as explained below:

a) If you made the last EMI on your bike loan or did a prepayment to close the bike loan, then get the final payment receipt from your bank

b) Within 2-3 weeks’ time of repaying the bike loan, you should receive all your documents from the bank via post at your registered address. The set of documents includes a No Dues Certificate (NDC) or No Objection Certificate (NOC) from the bank along with other documents submitted at the time of the bike loan application

c) Do collect the entire repayment statement of your bike loan from the bank which you can receive after submitting an application in the bank. This will be useful while updating the credit history in case of any discrepancies in your credit score and report

d) Hypothecation essentially means that the bike for which you have taken a loan for is kept as collateral with the bank until you pay off the loan. The bike is in the physical possession of the customer but the bank is the actual owner of the bike until the customer pays off the entire loan amount. Once the loan amount is completely repaid, hypothecation removal is required to transfer the ownership of the bike to the customer as there is no outstanding amount against the bike

Question 12

Why is my CIBIL Score important for getting my bike loan sanctioned?

Accepted Answer

If you want to take a bike loan, you cannot afford to ignore the Credit Information Bureau of India Limited (CIBIL) score. It gives lenders a snapshot of your credit health and history, and your willingness and ability to repay debts on time. CIBIL scores are an indispensable part of getting a bike loan sanctioned. Lenders need to know that you are a creditworthy applicant who they can afford to lend to. Nothing proves to be more reliable (at an initial stage) than a good CIBIL score. An unsatisfactory CIBIL score always weakens your chances of getting the bike loan without any hassles

Question 13

What should be the minimum CIBIL score to get a bike loan?

Accepted Answer

While there is no fixed minimum CIBIL score to apply for a bike loan, it is recommended that you ensure that you have a score of at least 750 before you apply to avoid potential rejection

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