The demand for two-wheelers in India has seen exponential growth over the past two decades. Whether it’s the agility of the bike or simply the simplicity and convenience that come with it, two-wheelers remain a fan favourite across the country. While buying a two-wheeler on EMI once meant paying a hefty down payment, today this aspect has undergone a significant change with the advent of zero-down payment bike loans. To make things more transparent, here is a guide that gives insight into the Minimum Down Payment Required for a Bike loan.
Introduction to Bike Finance in India
Bike finance is a type of loan offered by banks and NBFCs to customers who wish to purchase a two-wheeler. The loan amount can be repaid in easy instalments over a predetermined period, which can range from one to five years. Bike finance has become quite popular in India, owing to the increasing demand for bikes.
What is Down Payment?
A Down Payment is an amount that you pay upfront when you purchase a bike or any other vehicle. This amount is a percentage of the total cost of the bike, and the remaining amount is financed by a lender, usually a Bank or a Non-Banking Financial Company (NBFC).
In India, the minimum down payment required for bike finance is generally 10% to 30% of the total cost of the bike. However, this percentage can vary depending on various factors such as the model of the bike, the lender’s policies, and your creditworthiness.
For instance, if you want to buy a bike that costs Rs. 1 lakh, you may have to pay a down payment of Rs. 10,000 to Rs. 30,000, depending on the lender’s policies. If you have a good credit score, you may be able to negotiate a lower down payment.
When you take out a loan to buy a high-value item like a vehicle or a two-wheeler, you’ll often be asked to make an upfront deposit of between 5% and 15% of the purchase price. The bank will lend the remaining 85% to 90% of the amount. A deposit indicates the availability of funds at the time of purchase.
Factors Affecting the Down Payment
Several factors affect the down payment required for bike finance in India. These include:
- Credit Score – A good credit score is essential to avail of bike finance. If you have a high credit score, the lender may offer a lower down payment.
- Age – If you are young, the lender may require a higher down payment as young people are considered a higher risk.
- Income – Your income also plays a crucial role in determining the down payment. If you have a higher income, the lender may offer a lower down payment.
- Loan Amount – The loan amount also affects the down payment. If you opt for a higher loan amount, the down payment may be higher.
- Type of Bike – The type of bike you wish to purchase also affects the down payment. If you opt for a high-end bike, the down payment may be higher.
Benefits of Zero down Payment Bike Loan
If you still haven’t figured out how a zero down payment bike loan can help, here’s a list of benefits for you to check out.
- With a zero-down payment loan, you don’t have to negotiate the funds needed for an initial deposit.
- Your liquid cash flow can remain unimpeded.
- You will not need to deposit in your savings or withdraw from FD to fund the deposit amount.
- You won’t have to wait to save enough to meet the margin requirements.
- You can repay the borrowed amount in simple monthly instalments over a flexible period of time.
However, there are a few caveats to zero down payment bike loans. First, they can only cover specific bike models; second, you still have to pay the applicable loan processing fees for such loans. It is also important to note that opting for a zero down payment bike loan affects your EMI payments and loan tenure.
How to Buy Bikes with Minimum Down Payment?
When approaching a lender about renting a bike, you can choose the minimum deposit for the bike that you are willing to pay. This can range from 15 to 30% unless a zero-down payment offer is made. Here’s how you can opt for a bike loan with a low down payment.
- Visit the lender’s website or go to their branch.
- When applying online, click “Apply Now” and provide your personal and employment details.
- If you are applying offline, speak to a representative of the lending institution and fill out the application form.
- Use the online bike loan EMI calculator to get an idea of the EMI amount you will have to pay every month.
- Once you submit your details online, a representative from the lending institution will contact you with down payment options, interest rates, and other offers.
- Choose the lowest deposit for bikes offered by the renter, and the remaining on-road price of the bike will be covered by the amount of the two-wheeler rental.
Documents Required at the instance of Bike Loan Application
To apply for a bike loan in India, you will need to submit the following documents along with the duly filled application form:
Proof of Identity, which can be any of:
- Aadhaar
- Passport
- Voter card
- Driving licence
- PAN Card
- Company card
- A ration card with your photo pasted on it
Address Proof, which can be any of:
- Aadhaar
- Passport
- Voter card
- Driving licence
- Lease agreement
- Energy bills including telephone, electricity, and gas
- Ration card
- Real estate purchase contract
- Life insurance
- A letter confirming your address from the company you work for (for selected companies)
Proof of Income
- For Employees: latest pay stub or pay slip with deductions; name and designation clearly stated.
- For the self-employed, the last Income Tax Return
Eligibility criteria to Buy Bikes with Minimum Down Payment
The following are the Eligibility Criteria to buy Bikes with a Minimum Down Payment:
| Criteria | Salaried Applicant | Self-Employed Applicant |
|---|---|---|
| Age | Minimum – 21 years
Maximum – 65 years |
Minimum – 21 years
Maximum – 65 years |
| Credit Score | Around 750 | Around 750 |
| Employment | Employed for at least 1 year at a PLC, MNC or a PSE | Working for at least 1 year |
| Monthly Income | Minimum – ₹10,000 per month | Minimum – ₹10,000 per month |
| Residence | You must be residing in the same city for at least 1 year | You must be residing in the same city for at least 1 year |
Conclusion
In conclusion, the minimum down payment required for bike finance in India varies from lender to lender. It is important to compare the down payment requirements of different lenders before opting for bike finance. Additionally, factors such as credit score, age, income, loan amount, and type of bike also play a crucial role in determining the down payment. By considering these factors, you can make an informed decision and choose a lender that offers the best terms and conditions for bike finance.
