Two-Wheeler Loan for Self-Employed: Eligibility and Tips

December 03, 2024

two-wheeler-loan-for-self-employed

Two-wheeler Loans are available for both salaried and self-employed individuals. For the salaried, two-wheeler loan application process is fairly straightforward. However, for self-employed, the application process may differ based on the rules and regulations as set by the bank. 

 

In this article, we have explained the eligibility criteria and necessary documents required for a two wheeler loan for self-employed individuals. Additionally, we have provided a few valuable loan tips that may help you increase your chances of loan approval. 

 

Eligibility Criteria for Two-Wheeler Loan for Self-Employed

The eligibility criteria may vary across banks. We have taken the common requirements into account. You may contact your preferred bank for better clarity.

 

1. Age Criteria 

Most banks require borrowers to be at least 18 years old to be eligible for a bike loan for self-employed. The maximum age limit usually ranges between 59 - 60. For example, Ujjivan SFB offers two-wheeler loans to individuals falling under the age bracket of 18 - 59 years. 

 

2. Income Stability 

Banks may assess your income stability to ensure that you have the means to repay the loan. As a self-employed individual, your income stability is crucial. You may be required to provide proof of income through Income Tax Returns (ITRs) or business registration documents or last 6 months' bank statements. 

 

3. Credit Score 

Your credit score reflects your creditworthiness and ability to manage debt responsibly. Banks prefer applicants with good credit scores. A good CIBIL score indicates a lower risk of default. Therefore, it's essential to maintain a healthy credit score by paying your bills and loans on time. Any score above 750 is considered a good credit score.

 

4. Residence Stability 

Having a permanent address or a stable rental history can work in your favour when applying for a two-wheeler loan. 

 

5. Loan Amount vs Income Ratio 

Banks often have a maximum permissible ratio of the loan amount to your income. If the monthly loan instalment exceeds a certain percentage of your income, you may be deemed ineligible or offered a lower loan amount. 

 

By understanding these eligibility criteria, you can assess if you meet the requirements before applying for a two wheeler loan for self-employed. 

 

Tips for Securing a Two-Wheeler Loan 

Let's explore a few loan tips to increase your chances of securing a two-wheeler loan. 

 

1. Maintain Good Credit History 

Having a good credit score is extremely important. A poor or below average credit score may result in your loan application getting rejected. Even if you qualify for a loan with bad credit score, the interest rates could be on the higher side. Make sure to pay all your bills and EMIs on time to maintain a healthy credit history. 

 

2. Keep Your Financial Records Organised 

As a self-employed individual, it is essential to keep your financial records well-organised. This includes maintaining proper books of accounts, filing accurate ITRs, and having updated business registration documents. 

 

3. Show Proof of Income Stability 

To improve your chances of approval, provide solid proof of income stability to the bank. This can include ITRs, bank statements, and any other relevant documents showcasing the success and stability of your business. 

 

4. Offer a Higher Down Payment 

A higher down payment can reduce the loan amount and improve your chances of approval. Banks often view a higher down payment as a sign of commitment and lower risk. 

 

5. Seek Professional Advice 

If you are unsure about the loan application process or need assistance with understanding the eligibility criteria, consider seeking professional advice from a financial advisor or consultant. They can guide you through the process and help you make an informed decision. As an alternative, you can contact the bank to understand their two-wheeler loan requirements.

 

Remember, securing a bike loan for self-employed individual may require some extra effort, but with proper preparation and understanding of the process, you can increase your chances of approval. 

Final Thoughts

The self-employed are eligible for two-wheeler loans. However, check the eligibility criteria beforehand to avoid unpleasant surprises. 

 

Ujjivan SFB offers Chakra Loan - a two-wheeler loan that offers up to 95% of the on-road price of the vehicle, capped at ₹2.75 lakh. Enjoy competitive interest rates and flexible repayment tenures up to 48 months.

 

Apply Now

FAQs

1. What documents are required for two-wheeler loan application for self-employed?

The documents required for a two-wheeler loan application as a self-employed individual include proof of identity, address proof, income proof (ITRs or business registration documents), bank statements, business registration documents, shop and establishment certificate, and GST registration certificate. 

2. Can I get a two-wheeler loan without a credit score?

While having a good credit score improves your chances of loan approval, some banks may offer loans to individuals without a credit score. However, such loans may come with higher interest rates or stricter eligibility criteria. 

3. What is the maximum loan amount I can get for a two-wheeler loan?

The maximum loan amount you can get for a two-wheeler loan depends on various factors such as your income, creditworthiness, and the bank's policies. It is advisable to check with different banks to find the loan amount that suits your needs. Ujjivan SFB offers financing up to 95% of the on-road price of the vehicle. 

4. Can I prepay my two-wheeler loan?

Yes, most banks allow prepayment of two-wheeler loans. However, they may charge prepayment penalties or fees. It is essential to check the terms and conditions of your loan agreement before making any prepayments. 

5. How long does it take for a two wheeler loan for self-employed to be approved?

The approval time for a two wheeler loan for self-employed varies from bank to bank. Generally, it takes around 2-7 working days for the loan to be processed and approved, subject to meeting all the necessary requirements and document verification. 

6. What happens if I default on my freelance motorcycle loan?

Defaulting on your freelance motorcycle loan can have severe consequences, including damage to your credit score and legal action by the bank. It is important to communicate with your bank if you face financial difficulties. 

7. Can I use a two-wheeler loan to buy a used vehicle?

Yes, some banks offer loans for both new and used two-wheelers. However, the interest rates and eligibility criteria may differ compared to loans for new vehicles. 

8. How can I pay the EMI for the two-wheeler loan?

In case of most banks, if your credit score is low, the rate of interest could be higher. Consult with the bank for more details.  

9. If I have a low credit score, will the interest rate be high?

In case of most banks, if your credit score is low, the rate of interest could be higher. Consult with the bank for more details.  

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