Two-wheelers are no more an alternative to four-wheelers for those having a low budget. Today, the two-wheeler market is filled with innumerable options like racer bikes, electronic bikes, cruisers, sport bikes, and dirt bikes. These are stylish, modern, and expensive to an extent where some of these bikes cost more than a small car.
Along with fulfilling the traditional purpose of daily commuting through crowded streets and narrow lanes, two-wheelers these days are a style statement for Gen Z. The rise in the demand for regular and high-price two-wheelers has changed the face of 2-wheeler finance. Customers are taking two-wheeler loans to buy the latest bikes with new features and designs.
The importance of 2-wheeler finance can be understood from the fact that in India, 75% of two-wheeler purchasing is done through loans. As per statistics, the bike loan segment in the Indian market is expected to increase by around 11% compounded annually.
Various lenders offer two-wheeler loans at competitive interest rates and do not ask for extensive two-wheeler loan documents. If you are one of those who have applied for a two-wheeler loan but had their application rejected, here is a complete guide to why your application might have got rejected and how you can overcome it.
Reasons Why Your Two-Wheeler Loan Got Rejected
There can be multiple reasons for which your bike loan application may have been rejected. Understanding these can help you apply more carefully next time. Several loan rejections can affect your credit history negatively, so it is crucial to apply carefully for a bike loan to get it approved.
- Multiple financial obligations: Before sanctioning a loan, the lender checks your present financial commitments. If you already have too many debts or financial commitments in your name that take up most of your monthly income, the lender will hesitate to offer you a loan. There is a high possibility that you will not be able to meet an additional financial responsibility, and your loan application may get rejected.
Solution: Consolidate all your debts and pay them off before applying for a fresh bike loan. Try and reduce your monthly financial burden to as less as possible.
- Incomplete two-wheeler loan documents: Like any other loan, the applicant needs to furnish certain documents to get a two-wheeler loan. The loan documents required for a bike loan are a salary slip, Form 16 copy, income tax return copy, and KYC documents like identity and address proofs, photograph, etc. If any of these documents are missing or incorrect, the lender may reject your loan application.
Solution: Most lenders give the list of documents required to get a bike loan on their website. Check the list and ensure all your loan documents are correct and complete before applying for a bike loan.
- Poor credit score: The lender checks the credit history and credit score of the loan applicant before processing his loan application. The credit score and credit history inform the lender about the financial health and habits of the applicant. An applicant who has a strong credit history and good credit score has been regular with his financial commitments in the past and has not defaulted on his loan repayments. Lenders prefer giving loans to reliable customers who are financially disciplined. A customer who has defaulted on his payments in the past has a high chance of repeating the same with a fresh bike loan and the lender may reject his loan application.
Solution: If your credit score and credit history are poor, make rectifications as soon as possible. Pay off long-standing debts and be disciplined with your financial commitments like credit card bills and EMIs so that it boosts your credit score.
By taking care of the above-mentioned points, a customer can increase his chances of getting a bike loan at low-interest rates from a lender. Reputed lending institutions like Fullerton India offer two-wheeler loans with high loan to value, attractive interest rates, and flexible loan repayment options.