Two Wheeler Loan:

Though a small part of the Indian Loan Market, the Two Wheeler Loan schemes are one of the fastest growing of all other segments. The reach of this segment is also wider as compared to the other categories of the Loan Market.

Loan extended to applicants eligible under Two Wheeler loan eligibility norms, bears following features:

• Funding is offered by all major banks and other FIs to enable consumers to purchase their own vehicles.
• The stake involved is much smaller, i.e. the quantum of loan that is to be disbursed is smaller vis-à-vis other segments of the Indian automobile loan market.
• Thus institutions are able to offer loans at an easy Two Wheeler Loan interest rate.
• Above is also why almost all major banks offer loans to purchase two-wheelers without the requirement of any guarantor.
• The make and manufacturing-company of two wheelers also play a very important part in the determination of various kinds of factors at which the loan will be disbursed, such as the Two Wheeler loan eligibility norms and ROI.

Two Wheeler Loan Interest Rate:

Two Wheeler Loan  rate is the lending rate of interest at which the loan is offered to eligible borrowers, as specified by the Two Wheeler Loan review analysis and official websites of various banks:

• Determination of the Two Wheeler Loan  rate is as per the base rate.
• This is the rate that is decided by each bank, as per the rules set by the Reserve bank of India.
• It is thus a floor rate, and the individual Two Wheeler Loan interest rate of each bank, differs by some basis points.
• The individual Two Wheeler Loan  rate of major banks is given below:

a)    Allahabad Bank: 11% p.a.

b)    Bank of Baroda: 12.50% p.a.

c)    Bank of India: 9.75% p.a.

d)    Indian Overseas Bank: 11.25% p.a.

e)    South Indian Bank: 14.75% p.a.

f)    Union bank of India: 10.50% p.a. to 11% p.a.   

• Usually, the Two Wheeler Loan interest rate by an individual bank may also differ, depending on the location of the borrower, as has been stated by many Two Wheeler Loan review analysis.

Two Wheeler Loan Eligibility Norms:

As per the official websites of banks, and the online and offline Two Wheeler Loan review articles, following are persons eligible for loan:

• Salaried person who is a permanent employee of:

a)    Government organization (central/state)

b)    PSUs

c)    Reputed educational colleges and schools

d)    Reputed private companies

Above should have been in service for at least 1 year.

• Non-salaried borrower, who may be a self-employed person or a professional.
• Minimum amount of gross salary or income should be at least Rs.50, 000 and above
• Above criterion may see some relaxation, if loan-seeker is not located in a metropolitan city.
• All should have been living at their present residential address for at least the past one year.

Quantum Of Two Wheeler Loan:

• As per the varied Two Wheeler Loan review articles, the quantum of loan is generally offered up to a limit, that is equivalent to 70% to 85% of the cost of the two-wheeler.
• The other determinant is the repayment capacity of the borrower, which is in turn based on the amount of net take home income or salary as the case may be.

Procedure To Be Followed While Applying For Two Wheeler Loan And Documents:

• According to the Two Wheeler loan eligibility norms, if you are eligible for loan at Two Wheeler Loan  rate, then you should submit following documents:

a)            Identity Proof: passport copy / credit card, bearing photograph / PAN Card.

b)            Residential Proof: copy of any utility bill / ration card / PAN Card

c)            Proof of Income: copy of salary slip of last one year or 6 months / copy of ITR filed

d)            Copy of the bank statement

e)            Two photographs  

• Almost all major banks have the facility enabling you to download form from their official website.
• A one-time processing fee is also charged at 3% to 4% of loan amount or Rs.5000 to Rs.6000, whichever is lower.
• Loan processing by all major banks, usually takes 2-3 days.

Tenure:

• Borrowers, who had availed of loan, after meeting Two Wheeler loan eligibility norms, usually have to repay entire amount in a period that ranges from 1 year to over 4 years.
• The tenure of repayment may also differ as per the age of the borrower.

Repayment Of Two Wheeler Loan:

The generally and commonly found modes of repayment, according to the Two Wheeler Loan review, are that of:

• PDCs: Those are required to be submitted by the borrower at the time of submission of other documents, along with loan application.
• Direct deduction from the salary account of the borrower: a letter of undertaking should have been submitted by the borrower, to the bank, authorizing it to do so.

Pre-Closure Of Two Wheeler Loan:

There are many banks that charge a penalty if borrower chooses to repay loan before end of tenure. The rates if charges may differ:

• 4% p.a. to 6% p.a. if repayment done within first one year of disbursal
• 1.5% p.a. to 4% p.a. if repayment done after end of first year of tenure
• Many banks do not allow pre-closure before the end of first six months.

Delay In Payment Of Two Wheeler Loan Emis:

• General range of the charge that banks levy, in case of late payment of installment, is 2% per annum to about 2.75% per annum.
• Above charge is levied on the amount of loan that is left outstanding, including the interest at Two Wheeler Loan rate.
• It is also independent of the other charges and fees, including the Two Wheeler Loan interest rate.