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CIBIL Score: Bike Loan

What is the fastest way to go from one place to another? On a bird? With superman? Nope, it is through a two-wheeler. Waiting in long queues for public vehicles is no longer a viable option of transport, especially in major metropolitan cities across India. Having a personal vehicle can be difficult as cars are expensive. The best solution to this problem is a bike. Bikes are useful as they consume less fuel, provide better mileage and can easily slide through traffic during peak hours. Another advantage of a bike is that it is less expensive, this implies that it can be easily availed through a small loan. A small scooty is easily affordable through EMIs. A two-wheeler like a scooty can become an important ally for daily as well as personal transport. So if you are thinking about getting a bike loan, read more to find out. A bike loan is a loan required to finance the purchase of a two-wheeler over easy installments. Almost, all banks and automotive dealers provide a hassle-free loan applicability process. But, do keep in mind that there is always a small chance that your application might get rejected!

What is a Good CIBIL Score for a Bike in India?

There is no such fixed score for availing a bike loan, but it is generally assumed that all financial institutions accept a score of 600 plus or 750 upwards. The CIBIL score ranges between 300 to 900. The higher the number, the better are your chances of getting a bike loan. Different banks have different criteria or eligibility conditions for dispersing a bike loan. Therefore, it is advisable to maintain a good credit score.

Benefits of a Bike Loan

Low down payment - The best part about a bike loan is the low amount you have to pay as down payment. Banks finance upto 90% of the bike’s value. The remainder 10% is what you have to pay for down payment. This implies that if your bike is worth ₹50,000, all you have to pay is ₹5,000 to bring your brand new bike home!
Instant loan - All automotive houses have got direct deals with banks with respect to loan disbursement. You can do this entire process online within a day and bring home a new bike by EOD.
Repayment tenure - The repayment tenure of a bike loan is usually between 12 and 48 months. You also have an option to choose the flexibility of tenure with respect to EMI and online payment. This ensures a lesser financial burden and provides suitable time period to pay back the two wheeler loan.
Flexible tenure - As mentioned above, you can choose a flexible tenure in 2 wheeler loans for up to 4 years for easier repayment.
No charges - Most banks do not have any additional or extra charges with respect to the loan amount. This again helps ease the financial burden.
Insurance cover - As per Indian Motor Act, the automotive dealer along with the bank provides insurance cover for both the vehicle as well as the accidental cover for the buyer at a marginal annual premium, while sanctioning the loan.

Impact of a Low CIBIL Score on two-wheeler loan

As mentioned before, one of the few reasons why banks reject an application for a bike loan is because of a low credit score (this is the minimum requirement). Mentioned below are a few reasons for a poor credit score.

Previous or existing loans - If you have an existing bike loan or have been recently rejected for a bike loan application and have immediately applied for another loan, there is greater change for the new loan application to get rejected. This can further lead to a bad credit score.

Delayed payment - If you fail to pay credit card EMIs on time on a regular basis, it will have a negative impact on your credit score

Credit card bills - Ensure that you pay your credit card bills in full every month on the due date. The reason being that the outstanding amount is considered as overdue by CIBIL. A consistent buildup of overdues can lower your CIBIL score.

Missing payments - This is probably the worst case scenarios for your CIBIL score. Failure to pay even a single payment can give a negative marking to your overall score.

Multiple credit applications - When you apply for credit to multiple banks at the same time, it increases the chances of a hard inquiry. Each negative inquiry can downgrade your CIBIL score drastically.

Keeping all these things in mind, additional statutory details which a bank requires for disbursing a bike loan include a mandatory age of 18 years, regular income and repayment potential, domiciliary status, employment status, bank statement and KYC.

How to Get a Bike Loan with a Bad CIBIL Score?

If you have a bad credit score and still need a loan, you will have to compromise on a few pointers mentioned below.

More down payment - With a bad credit score, you will have to pay more on down payment. Down payment is the fixed amount you have to pay on any bike loan that you seek. Banks usually finance 80 to 90 percent of the vehicle via loan, the remainder is paid upfront as a down payment. Making down payment reduces a lot of outgo on your interest rate and reduces the loan tenure. This is a suitable option as the loan amount to be repaid is less.

Negotiate better lending terms - There are many instances which may have caused you to default on your previous loan and can still have an impact on your credit score. It is always advisable to negotiate better lending terms with your bank and bike dealer even if the interest is a little bit higher.

Compare multiple lenders - It is always wise to keep multiple options open for selecting and comparing different lenders. By doing enough research, you will be successful in getting a two-wheeler loan from the right lender with better interest rate, terms and conditions. This has been further facilitated by a new method of evaluating the creditworthiness of the borrowers. Banks and credit institutions look for additional criteria such as employment and a steady state of income.

Co-signer - A co-signer is a person who is equally held responsible for your bike loan, they are like a guarantor. If you have a bad credit score, getting a co-signer with a good credit score could be another viable option to get a two-wheeler loan. The creditworthiness of your co-signer will be taken into consideration for the loan approval.

FAQs on CIBIL Score for Bike Loan

What is a good credit score for a bike loan?

There is no such fixed credit score required for a bike loan, but it is advisable to have a score between 600 and 750, as this range is considered ideal for banks and credit institutions.

Can I get a bike loan without a good CIBIL score?

The chances of getting a bike loan with a bad CIBIL score is difficult, but not impossible. You can always negotiate a deal such as more initial down payment in order to reduce the overall loan amount.

How to check your CIBIL Report?

You can check your CIBIL report from the official website of CIBIL - cibil.com. You need to submit the following details - name, identity proof details and date of birth. Relevant contact details along with a few answers on your credit history. Post submission, your credit report will be sent to you in email.

How can I improve my credit rating?

You can improve your credit rating by paying all your outstanding credit card bills and loan EMIs on time. Another way is to clear all your previous debts and existing loans.