2-wheelers are the main means of transportation in India and low-interest bike loans have made it more affordable and easier for Indians to purchase their preferred 2-wheeler. It is critical to understand the 2-wheeler loan interest rates before applying for a bike loan. The interest rate varies depending on the borrower’s profile, repayment capacity, annual income, and loan type. You can use a bike finance EMI calculator to determine your monthly repayment plan as per your financial stability.
Types of Interest Rates
There are 2 sorts of interest rates for 2-wheeler loans: floating interest rates and fixed interest rates.
- Fixed interest rates are consistent regardless of market rate fluctuations. If you choose a fixed interest rate of 10%, it will remain constant until the debt is paid off.
- The floating interest rates change according to market conditions. As a result, your floating interest rate, which is linked to this rate, may alter over time.
Floating rates are less expensive than fixed rates. As a result, the majority of borrowers opt for floating rates on their 2-wheeler loans.
2-Wheeler Loan Interest Rates and Fees
It is critical to understand the 2-wheeler loan interest rates before applying for a bike loan. The interest rate varies depending on the borrower’s profile and is determined by market conditions and the discretion of the financial institution. Few interest rates and charges are mentioned below for your reference:
|Bank/NBFC||Interest Rates||Processing Fees||Prepayment charges||Foreclosure charges|
|Union Bank of India||9.90% – 10.00%||0.5% of the loan amount||Nil||3% – 10% Based on the time of foreclosure|
|Bank of India||6.85% – 8.55%||Rs. 500 – Rs. 10,000||Up to 3% of the Loan Amount||3% – 10% Based on the time of foreclosure|
|State Bank of India||16.25% – 18.00%||2% of the loan amount + GST||Nil||At bank’s discretion|
|Bajaj Auto Finance||7.25% – 11.60%||1%- 3% of loan amount||Nil||3% on principal outstanding amount + GST and nil after 12 EMI payments|
|Punjab National Bank||8.65% – 10.00%||0.5% of the loan amount||Nil||3% – 10% Based on the time of foreclosure|
|Axis Bank||10.80% – 28.30%||Up to 2.5% of the loan amount||5% of part payment amount||5% of principal outstanding|
|HDFC Bank||20.90%||Up to 2.5% of the loan amount||5% of the principal amount||6% of principal amount remaining|
How to Get a 2-Wheeler Loan with a Low-Interest Rate?
When applying for a 2-wheeler loan, you will always seek the lowest possible interest rate. Consider the following techniques for obtaining the lowest 2-wheeler loan interest rates:
Good Credit Score
A good credit score (over 700) can help you secure a low-interest 2-wheeler loan. Try to enhance your credit score and history by paying your credit card bills on time and in full, and repaying all loans on time.
Maintain Consistent Loan Payback
Before determining an interest rate on a personal loan, the lender considers not only your CIBIL score but also your loan payback history. Banks typically lend to clients who have not defaulted in the previous year.
Use an Excellent Banking Relationship
A positive relationship with your bank can increase your chances of getting a personal loan with low-interest rates.
Before applying for a new loan, check your debt-to-income ratio. Pay off previous loans to reduce this ratio. This ratio includes the portion of current income used to pay off credit card debt and other loans. If you have a low ratio, you have a better chance of earning favourable interest rates.
Negotiating with your bank can help you receive better interest rates when you don’t meet all of the loan eligibility standards.
Examine the Interest Rates of Various Lenders
First and foremost, compare the interest rates offered by various lending institutions. Then, select the bank with the lowest personal loan interest rate. After evaluating the interest rates, compute the monthly payments you have to pay to the lender using any bike finance EMI calculator available online.
Factors Influencing 2 Wheeler Loan Interest Rates
Examine the following elements that influence your 2-wheeler loan interest rates:
- Annual Income: Most lenders have a minimum income requirement for obtaining a 2-wheeler loan. A lower loan rate may be available if your income is higher.
- Employment Status: Depending on whether the applicant is self-employed or salaried, financial institutions provide varying bike loan interest rates. Salaried candidates will be awarded bike loans at a lower interest rate than self-employed applicants.
- Age: The applicant’s age is an important factor in establishing the loan interest rate. Because your ability to repay a loan may be decreased as you approach retirement age, you may be charged a higher interest rate.
- Credit Score: The applicant’s credit score is one of the most essential criteria for determining the 2-wheeler loan interest rate. If you have a strong credit score, you may be able to acquire a cheaper interest rate, however, if you have a negative credit score, you will be charged a higher interest rate.
While taking out a loan the loan cost is also affected by other elements such as processing fees, documentation charges, car inspection fees, and so on. Check all of these things before deciding on a loan. 2-wheeler loan interest rates are based on your profile and credit history. You should keep in mind how interest rates work to get the best offers according to your needs. You can also use a bike finance EMI calculator to know the best repayment plan.