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Know about the Processing Fee and Other Charges for Bike Loan

Know about the Processing Fee and Other Charges for Bike Loan

Riding a bike symbolises control, puts your mind at ease, and gets you out of traffic jams. No wonder why, this mode of transportation has become exceedingly popular for intra-city movement and long-distance thrill rides.

What’s more, with easy availability of bike loans at affordable interest rates, several enthusiasts are able to afford their dream motorcycle without hurting their budget. If you’re looking for the same, you must know about the two-wheeler loan processing fee and other charges as you begin your loan application.

Let us discuss the important loan charges to help you buy the bike you desire.

Processing fee for two wheeler loan

When you apply for two-wheeler finance, a lender may require you to pay an additional fee to process your loan. This is a one-time processing fee, which is non-refundable. A potential borrower must pay this charge at the time of filing their application for the two-wheeler loan. Let us look at some components that make up the processing fees.

Administrative charges for two wheeler loan

This is to cover the administrative expenses that are incurred while processing and sanctioning your loan. Some lenders may even charge this as a separate charge.

Documentation charges for bike loan

This fee is to cover the charges related to the post-disbursement documents like the disbursement letter, disbursement agreement, collateral documents, etc.

Other common charges for bike & two wheeler loans

Apart from the processing fee, bike finance entails miscellaneous charges such as:

Bounce charges-

If a cheque bounces due to technical reasons or insufficient funds in your account, the lender can charge you a penalty.

Cancellation charges

When you request to cancel the loan for some reason after the loan approval or disbursal, the lender may charge you for the cancellation.

Stamp duty charges

This is to cover the stamp duty expenses that are incurred during the two-wheeler loan registration.

Foreclosure charges

When you wish to repay the loan before the loan tenure is over, your lender might ask for a foreclosure charge.

Repossession charges

If the lender takes the vehicle through repossession, they might penalise you. This will occur if you fail to make the loan repayments.

These charges could be a percentage of the loan amount or a standard amount, depending on the lender. GST is applicable on some of these charges too.

What is the typical processing fee for two wheeler loans in India? 

In India, the processing fee for two wheeler loan is a one-time charge levied by lenders and financial institutions to cover administrative and verification costs. Typically, the two wheeler loan processing fee ranges between 0.5% and 2% of the loan amount, plus applicable GST. The exact bike loan processing fee depends on the lender, borrower profile, credit score, and ongoing offers. Some lenders may charge a flat fee, while others calculate it as a percentage of the sanctioned amount. During festive seasons or promotional campaigns, the processing fee for bike loan may be reduced or even waived to attract customers. It’s important to check this fee in advance, as it is usually non-refundable and directly impacts the overall cost of your two wheeler loan.

Can processing fees be negotiated or waived? Tips for applicants

Yes, the processing fee for two wheeler loan can sometimes be negotiated or even waived, depending on the lender, your credit profile, and current offers. Lenders and financial institutions may reduce the two wheeler loan processing fee to attract low-risk borrowers or during special promotions. Before applying, it helps to know where you stand and how to ask. 

Here are a few practical tips to improve your chances of saving on the bike loan processing fee or processing fee for bike loan:

  • Maintain a strong CIBIL score and stable income
  • Compare multiple lenders and use competing offers
  • Ask about festive or limited-time fee waivers
  • Negotiate directly with the loan officer
  • Opt for existing lender relationships or pre-approved offers

Impact of processing fee on total loan cost (With calculation example)

The processing fee for two wheeler loan directly increases your overall borrowing cost, as it is charged upfront. For example, if you take a bike loan of ₹1,00,000 and the two wheeler loan processing fee is 2%, you pay ₹2,000 plus GST. This bike loan processing fee raises your effective loan cost, even though EMIs remain unchanged. Since the processing fee for bike loan is usually non-refundable, comparing fees across lenders is important to accurately assess the total cost of your two wheeler loan.

Things to compare before taking a two wheeler loan

Loan charges need to be considered carefully before choosing a bike loan. There are also other elements to factor in while selecting a bike loan that best fits your requirements:

Loan amount

Most financial institutions cover 100% of your bike’s value. Based on your capacity to put forward a down payment, you can even opt for a zero-down payment loan.

Two-wheeler loan interest rate

Some lenders can offer you a lower rate than the market’s rate if you have a good credit history.

Tenure

Your tenure can also influence your interest rate. A longer tenure means a lower two-wheeler loan interest rate but it could also mean paying more in total over the entire tenure.

Flexible EMI payment

Most lenders offer some flexibility in EMI payment. Check with your lender if you can choose a flexible EMI scheme that suits your financial situation better.

Eligibility criteria for two wheeler loan

Before applying for bike finance, check your two-wheeler loan eligibility criteria online.

To be eligible for a motorcycle loan, you must maintain a decent CIBIL score (preferably 750 and above) and have a stable job for at least one year. Self-employed individuals can apply for a loan too by providing proof of stable employment for at least a year.

The minimum age of the loan applicant should be at least 21 years, and the maximum age limit is usually between 60 to 65 years, depending upon the lender. Also, it is preferable if you prove residence in the same home for at least one year to show a stable residential status.

Required documents for two wheeler/bike loan

After meeting the primary criteria to avail a two-wheeler loan, you need to submit a list of documents to the lender. Your loan will be processed based on the verification and approval of the following documents-

  • Identification proof- Aadhar Card/Driver’s License/Pan Card/Passport/Voter’s ID
  • Address Proof- Passport/Electricity Bill/Ration Card
  • Last 3 months bank statements (mandatory)
  • Income Proof (if required)

Based on your profile and documents’ approval, you can successfully avail of bike finance at attractive bike loan interest rates.

Conclusion

All set to add a brand-new bike to your garage? Apply for a motorcycle loan at Tata Capital at competitive two-wheeler loan interest rates.

Not sure about the kind of EMI you will pay if you take a loan from us? Don’t fret! Simply log on to our website to use our bike loan EMI calculator to accurately evaluate your monthly instalments. So, make a smart financial move by applying for a two-wheeler loan with us today!

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FAQs

What is the usual processing fee for a two wheeler loan in India?

 

The processing fee for two wheeler loan usually ranges from 0.5% to 2% of the loan amount. The exact two wheeler loan processing fee depends on lender policies and borrower profile.

Do all banks and NBFCs charge the same bike loan processing fee?

 

No. The bike loan processing fee varies across lenders and financial institutions based on risk assessment, loan amount, tenure, and offers. Hence, the processing fee for bike loan is not uniform.

What other charges should I expect along with processing fee for a bike loan?

 

Along with the processing fee for bike loan, you may pay documentation charges, stamp duty, late payment penalties, and prepayment fees, which together affect the overall two wheeler loan cost.

Can the bike loan processing fee be refunded if my loan is rejected?

 

Usually, the bike loan processing fee is non-refundable, even if the application is rejected, as it covers verification costs. Some lenders may refund it during special promotional offers.

Can I negotiate or get a waiver on processing fee for my two wheeler loan?

 

Yes, the processing fee for two wheeler loan can sometimes be negotiated or waived for borrowers with high credit scores, existing lender relationships, or during festive or limited-period offers.

Will GST be charged on my two wheeler loan processing fee in India?

 

Yes, GST is applicable on the two wheeler loan processing fee. The tax is charged over and above the base processing fee for bike loan, increasing the total upfront cost.

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