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

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.