5 Mistakes to Avoid While Applying for a Two-Wheeler Loan
Everyone wants to own a vehicle at some point in life. However, buying a vehicle in a country like India can turn out to be an expensive affair. Several options are available to make the purchase possible, and an automobile loan is one of them. You can apply for a bike loan if you want to buy a two-wheeler.
There are different types of bike loans available out there. However, there are several things, like the bike loan interest rate, that you must check before you apply for a bike loan. Read on to learn the top 5 mistakes you must avoid while applying for a two-wheeler loan.
Mistakes to avoid while applying for a two-wheeler loan
While taking a bike loan is one of the easiest options to access the money to purchase a two-wheeler, the entire process has several nuances. Therefore, you must fill in the application carefully. Let’s look at the five mistakes you must avoid while applying for a bike loan.
1. Not Checking Your Credit Score
Before you apply for a bike loan, you must check your credit score. If you have a good credit score, it assures the bank that you have financial stability and high creditworthiness. It also indicates that you can repay the loan without any hassle. However, the bank might refuse to give you a loan if you have a poor credit score. A few banks might give you a loan, but they will charge a higher bike loan interest rate. Therefore, a good credit score will enhance your ability to get a better deal with a low bike loan interest rate.
2. Lack of Proper Research
Applying for a bike loan requires thorough research. Getting a loan from the first lender who reaches out to you is not the best option. Before finalising a vendor, you must read about the bike loan offerings from different banks. Also, the bike loan interest rate differs from bank to bank. You must compare these interest rates to ensure you don’t end up paying higher interest on the loan amount. Apart from the interest rate, you must also research the loan tenure and the terms and conditions associated with the loan.
3. Not Reading the Loan Document
The loan document is what governs your entire loan. Therefore, you should take your time while signing the loan document. You must read each line of the document and go through all the clauses governing the loan. If you cannot understand a particular clause of the loan document, you must reach out to the bank and clarify all your doubts. You must also check if the interest rate offered to you by the bank matches what’s mentioned in the loan document.
Some financial institutions may offer a low-interest rate. However, this may be compensated by higher costs, such as prepayment penalties, late payment penalties, and foreclosure penalties, among others. Check all the fees the lender charges before you sign the loan document.
4. Not Providing All the Required Documents
After applying for a bike loan, many customers frequently ask the lender for a list of the necessary paperwork. Your loan application will only be approved if you have the necessary documentation to complete the lending process. Therefore, you must enquire about the list of required documents from the financial institution.
You must submit the necessary paperwork immediately since the lender can withhold or deny your application if the waiting time increases. Additionally, ensure all your information—name, date of birth, etc.—is accurate and that you have the necessary supporting documentation.
5. Don’t Select a Bike before Knowing Your Approved Loan Amount
While you may want to buy a particular bike, you must only book the same with an understanding of your approved loan limit. You must reach out to the lender and get a fair idea of the amount you can borrow. Buying a bike that costs Rs. 90,000 will not make sense if the bank only approves a loan of Rs. 60,000. However, if you have some additional funds at your disposal, you must pay a down payment and apply for a loan, as your borrowing cost will go down.
Applying for a bike loan is a tricky process. However, you should complete the entire process calmly. You must reach out to different lenders and try to understand their offerings better so that you can make an informed decision. You must also know your credit score and try to maintain it so that you can get a better deal. Go through all the loan-related documents carefully before you sign on them to avoid any shocks in the future.