The process of refinancing a two-wheeler loan

Refinancing your ongoing two-wheeler loan might seem to be a profitable deal. Now that you know that lenders facilitate loan refinancing for car loans, you might be wondering whether the same is applicable to your motorcycle. Fortunately, you can refinance your two-wheeler loan and settle for a better deal.

Maybe, your financial stature is different now compared to what it was when you took the first loan. Based on the new loan repayment terms, tenure, and EMI, refinancing might happen to be a better option for you. Sometimes, borrowers refinance loans when they are eligible for lower interest rates. In this article, you will get to know about the refinancing process for two-wheeler loans in detail.

What does loan refinancing mean?

The process of loan refinancing involves the replacement of your ongoing loan with a new one. After comparing the loan benefits from a different creditor, you pay off the old loan using the new credit. Based on the new loan repayment terms, you need to pay off the EMIs.

It’s logical to refinance your bike loan only when you find better repayment terms or benefits with the new creditor. Maybe, your credit record has improved and you get a great offer from a top lender with a low rate of interest. Under these conditions, you need to weigh the refinancing advantages carefully before going for the same.

Here are some conditions when you should refinance your motorcycle loan.

• You have a better credit score, making you eligible for lower loan interest rates
• You need a longer loan tenure to repay the outstanding loan
• You want to close the loan early with a shorter tenure and lower rates
• You get a better deal or get to enjoy other loan benefits

How can you refinance your two-wheeler loan?

Now let’s have a look at the refinancing process for your two-wheeler loan. Reputed banks and NBFCs offer these loans at attractive rates of interest.

Consider your refinancing advantages

Compare the refinancing advantages and downsides before finalizing your loan decision. Among the perks, you might enjoy lower EMIs and rates of interest. Among the disadvantages, you might have to shell out pre-closure penalties to your existing lender. Besides, the new loan might come along with a processing fee for consolidating debt and refinancing.

Once you calculate the overall expenses like processing fees and penalties, you can determine the actual benefit in terms of savings you can make.

Consult your existing creditor

Before you refinance your two-wheeler loan, make sure that your current lender has received all the necessary payments. Your new creditor would want to know how much you owe to your existing lender. Once you receive the payoff amount from the current lender, you need to refinance the loan within a stipulated period such as two weeks. Also, enquire about the processing fees, charges, and penalties so that you can factor them in while calculating your refinancing advantages.

When you refinance the loan, evaluate how much value your bike holds. Creditors might consider you to be a high-risk client if the money you owe exceeds the motorcycle’s value. This would make it challenging for you to acquire a new loan.

Inspect your credit score and credit report

It makes sense to know your loan eligibility before you apply for the financial privilege. Therefore, have a look at your credit score and credit report. This way, you can make sure that it doesn’t carry any wrong information or errors. Reputed lenders may scrutinize your credit records while making the loan decision. Under any condition, they would wish to ensure that they lend money to responsible borrowers.

If you have a higher credit score, you enjoy a better chance of loan approval. Besides, a healthy credit score can fetch you additional benefits like lower rates of interest.

Furnish the necessary loan documents

Before applying for a new loan, gather the necessary loan documents and keep them handy. Here are some of the crucial documents you would need during the refinancing process.

• Your bike’s identification number
• Your driving license
• The motorcycle’s make and model
• The value of the motorcycle
• Insurance details of the bike

This way, borrowers will be able to complete the process of loan application without any glitches.

Compare lenders

Based on your loan requirements, compare the terms and conditions of different lenders before finalizing your decision. Have a look at the loan interest rates from different banks and credit unions. If your credit score doesn’t look too impressive, you might approach some of the reputed NBFCs as well.

Based on your credit score, lenders might give you different quotes for your two-wheeler loan. With a better score, you can qualify for more favourable terms of repayment. While comparing lenders, consider the overall amount you would be paying to them, including the processing fee and other charges, if any.

Apply for the refinancing loan

Now that you have understood the loan repayment terms in depth, decide the lender to go with and apply for the loan. Currently, many lenders allow borrowers to apply for refinancing loans online. Once they receive your request, they would scrutinize your application and credit report. 

Accordingly, they would follow up and provide the necessary details so that you can complete the loan application. Once they approve the loan, you would receive a notification regarding when they are going to process the amount.

Conclusion

If you are financially vigilant and want to save on your EMIs, two-wheeler loan refinancing would be a great option. Compare the processing fees, loan interest rates, and other aspects we have explained in this article before you decide. 

With the right lender, you can enjoy lower interest rates, flexible repayment periods, and better terms while you repay your loan. Prioritize your requirements while you apply for your refinancing loan with one of the lenders.