With the EMI culture rapidly becoming a norm in India, more and more people are considering buying vehicles without paying the full amount upfront. If you’re planning to purchase a bike on EMI, it’s essential to understand how important your credit score is in this entire process. Your credit score not only affects your loan approval chances but also determines the interest rate and loan terms offered to you.
A credit score is a three-digit number ranging from 300 to 900 that reflects your creditworthiness — in simpler terms, how reliably you’ve repaid previous loans or credit card dues. This score is generated by credit bureaus like CIBIL, Equifax, Experian, etc., based on your credit history, repayment behavior, credit mix, and utilization.
When applying for a bike loan, lenders use your credit score to assess the risk involved in lending you money. A higher score means you're more likely to get your loan approved with lower interest rates and better repayment terms. On the other hand, a low score can either lead to loan rejection or result in higher EMIs and stricter terms.
| Credit Score Range | Loan Approval Probability | Expected Loan Terms |
|---|---|---|
| 750 and above | Very High | Low interest rate, flexible repayment |
| 701 – 750 | Good | Average interest, moderate terms |
| 650 – 700 | Limited | Higher interest, higher down payment |
| Below 650 | Difficult | Loan may be rejected or come with tough terms |
If your credit score is below 650, lenders consider you a high-risk borrower. Here's what you may face:
Higher interest rates
Lower loan amounts
Larger down payments
Stricter repayment conditions
Shorter loan tenures
In such cases, putting more money upfront as a down payment can help ease the risk for lenders and improve your chances of getting a loan, albeit still with tough terms.
Yes, some NBFCs and private lenders do offer loans to individuals with low credit scores, but the interest rates are often significantly higher, and the eligibility criteria are stricter.
If you're planning to buy a bike on EMI, maintaining a credit score above 750 can make the process smoother, more affordable, and stress-free. Check your score regularly, pay your EMIs on time, and avoid unnecessary debts — because when it comes to loans, your credit score tells your story.
