Two-wheelers are a great help to travel with appropriate social distance. You may have taken a two-wheeler loan to purchase a two-wheeler. Sometimes you may no longer pay your two-wheeler vehicle loan instalments due to a financial crunch or loss of your job. In such a case, it is best to surrender your two-wheeler back to the dealer voluntarily. This is much better than involuntary possession of your vehicle by your dealer, which can be detrimental financially and emotionally. In a voluntary surrender, you have to clearly state the facts and hand over the keys to the dealer. Sometimes, you may have to pay an additional amount to finish the payment for your bike loan in case the bike proceeds are not sufficient.
The lender of the two-wheeler loan may transfer your remaining bike loan to a collection agency for realisation of your loan proceeds. These facts are recorded in your credit history, resulting in which your credit score will be impacted. If the loan defaults, the lender is also within their rights to take you to court. The credit score gets downgraded, as even a voluntary vehicle surrender is tantamount to a default. Such a credit downgrade may remain up to seven years in your credit history. This may even drive up the lending interest rates for any future loans you may try to take.
Some solutions to Voluntary Vehicle Surrender
Alternatively, you can opt for some of the solutions proposed below. This will preserve your credit score and not mark you as a defaulter.
- Opt for loan re-negotiation and alteration of some of the bike loan terms like an extension of the loan term, reduction in the EMI amounts, etc.
- Refinance the bike loan with other lenders.
- If the market value of your used bike is higher than the remaining bike loan amount, you can try to sell the bike which can be used to pay off the loan.
When your financial position strengthens, you may decide to go for another two-wheeler loan. If so, you may consider some of these terms and conditions on vehicle loans available for you-
Vehicle Loan financing: It can vary anywhere between Rs.25,000 to Rs.3,00,000.
Tenure of a bike loan: The tenure for the two-wheeler loan repayment can be scheduled at your convenience and can vary between 6 months to 5 years.
Interest Rates: Two-wheeler Loan interest rates can start from 10.75% p.a. upwards for your Equated Monthly Instalments (EMI) payments.
Two-wheeler Loan EMI Calculator: A two-wheeler loan EMI Calculator is a calculator where you can conveniently calculate the EMI instalment payable after you input the loan principal, interest rate, and loan tenure.
Repayment: Repayments can be structured around your convenience. Normally there are two EMI options; fixed and structured EMIs for repayment. You can choose the EMI option you are comfortable with.
Modes of repayment: You can pay off your bike loan through online payments or drop off a cheque.
Miscellaneous charges: There are other charges levied by two-wheeler loan financing companies, which are all made known to the customer upfront.
Eligibility for a Two-Wheeler Loan
- You should be between 21 to 60 years.
- You should have resided in the city where you are applying for a loan for at least two years.
- You should be in stable, income-generating employment for at least one year.
- You have to submit the following documentation to secure the loan-
1) Identity proof documents.
2) Income proof like a salary certificate
3) Residence Proof like Aadhaar card
4) the last three months’ statement from your bank showing your account activity.
You should prudently manage all your financial outstandings and ensure you do not default or miss a loan payment. This is more important in the case of two-wheeler loans, which ensure safe transport for us, especially post-Covid. Prudent management and timely payment of loans also help you preserve a good credit rating and credit history.