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All You Need to Know About Scooter Loans

With the widespread of COVID-19, the demand for two-wheelers has soared tremendously. The reason is that it offers a safer way to commute to work than public transport. Getting a scooter or a bike has become a necessity than a luxury.

 

However, due to the financial instability induced by the current pandemic, not everyone can afford to buy a scooter from their pockets. But, that does not mean that you should not get a scooter. You can apply for a scooter loan and manage your finances without dipping into your savings. 

 

Top things know about a scooter loan. 

 

If you are planning to apply for a scooter loan, you must know the following aspects of it before submitting your application: 

 

Type of scooter loan

 

There are generally two types of scooter loans – secured and unsecured scooter loans. A secured scooter loan is a credit facility wherein you need to pledge an asset with considerable value as collateral. The asset must have the same value, if not more, as the loan amount you have opted for. Whereas, an unsecured loan does not have such requirements. 

 

Most scooter loans are unsecured. It means that you do not have to pledge anything as collateral. However, you need to convince your lender you have a stable income and excellent credit score. Some lenders also offer secured loans. The benefit of getting a secured loan is that you can get a lower two-wheeler loan interest rate. 

 

Type of two-wheeler loan interest rate

 

When you apply for a scooter loan, you will have two options available – floating and fixed rate of interest. A floating interest rate is where the rate of interest is subject to fluctuations based on factors like the market condition, loan amount, CIBIL score, and EMIs. Not every lender offers a floating interest rate.  

 

On the other hand, a fixed interest rate is where the rate of interest has been mutually agreed upon between the lender and the borrower. The two-wheeler loan interest rate remains constants through the loan tenure. 

 

Repayment tenure

 

The loan tenure is one of the crucial factors in a scooter loan application. It generally ranges between 12 to 60 months, depending on your income and credit score. Lenders offer a flexible tenure to help you manage your finances and make timely repayments. 

 

But, it is worth noting that a longer loan tenure leads to higher interest rates. Lenders generally charge a higher interest rate to justify the risks involved. If you have the budget, it is advisable to apply for a shorter scooter loan. 

 

Credit score

 

Since it is an unsecured scooter loan, the CIBIL score plays a crucial role in determining whether or not you are a creditworthy borrower. It is a three-digit number ranging between 300 to 900 that contains information about a borrower’s credit history, length of credit history, credit utilization, credit mix, and new credit. The close your credit score to the 900 range, the better are your chances of securing the best two-wheeler loan interest rate.  

 

Documents required

 

The documents required to apply for a scooter loan are: 

  • Identification proof: Aadhaar Card, Passport, Voters ID Card, or PAN Card. 
  • Address proof:  Aadhaar Card, Voters ID Card, Passport, or Utility Bill. 
  • Age proof: Passport, Birth Certificate, Aadhaar Card, or Voters ID Card. 
  • Income Proof: Bank statement, ITR, Salary Slips, or Form 16. 
  • A recent passport-sized photo. 

 

So, if you are applying for a scooter loan, it is imperative to know the above-said things to make an informed decision.

jesso
I'm professional content writer and blogger
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