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What are the factors that determine my Two Wheeler Loan Interest Rate?

By Finserv MARKETS - Aug 27,2019
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Factors that Determine Two-Wheeler Loan Interest Rate?

Owning a two-wheeler and zipping through the city lanes is often one of the first aspirations many of us have as children. As we start working and building up our bank balances, it is an aspiration we look forward to fulfilling.

As soon as you take the first step towards even enquiring into the financing options available to you, you will immediately be swamped by promotional telephone calls and emails that will offer you the BEST interest rates on your two-wheeler loan. Even as you navigate through the endless options available to you, it is essential to keep your budget in mind.

With consideration to your income, decide the down payment you can make, the loan amount you will require as well as the tenure over which you can repay your loan through Equated Monthly Installments (EMIs). Many lenders will also allow you to change your loan tenure while you are paying off your EMIs. Bajaj Finserv Two and Three Wheeler Loan, available on Finserv MARKETS, allows for partial foreclosure of the loan also in certain cases thereby allowing you to shorten the loan period or even lower your remaining EMI amounts.

Different lenders will offer different rates of interest on your two-wheeler loan to you, but you must determine the interest rate that you can afford for the vehicle you are looking to purchase. Several factors determine the interest rates that banks and financial institutions can offer to you. Read on to learn what they are, and how you can ensure the lowest interest rates while availing your two-wheeler loan.

1. Your credit history is usually the biggest criterion for a lender to decide the rate of interest at which you can avail a two wheeler loan. Your CIBIL score, your past loans and their repayment schedule will be analysed by your lender before they even sanction your loan. If you have a high CIBIL score rating which demonstrates your creditworthiness, you will be able to negotiate a lower rate of interest while availing your two-wheeler loan.

Your income is also a factor on which lenders will decide the rate of interest you must pay on your loan since your salary will determine how much of the loan amount you can repay as EMIs. If your debt-to-income ratio is very high, lenders may be wary of you paying your EMIs and would want to cover their risks by offering you higher interest rates.

2. Down payment refers to the amount that you are able to put in towards purchasing the two-wheeler. Thus, if your payment covers up to 70% of the price of your desired vehicle, the loan amount you require from your lender will be lesser and your lender will be more inclined to provide you with lower interest rates. However, if you require up to 100% financing for purchasing your two-wheeler, your lender is more likely to negotiate a higher rate of interest on the loan.

3. Your place of residence also plays a considerable part in determining interest rates on your two-wheeler loan as it determines your debt-to-income ratio. If you live in a metropolitan city like Mumbai, your costs of living are likely to be higher than if you reside in a Tier Two city; and hence, your salary has to be considerably higher to be able to afford being able to repay your two wheeler loan. Most lenders also offer prepayment concessions depending on how soon you can afford to repay your loan. Bajaj Finserv Two and Three Wheeler Loan, available on Finserv MARKETS, apply only a three percent foreclosure charge on the principal outstanding amount if you choose to foreclose before the twelfth EMI billing.

 

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4. The make and model of the vehicle you are looking to purchase also greatly determine the rates of interest you will be offered on the financing you avail from your lender. In many cases, the vehicle acts as collateral during the loan period and if you fail to repay the loan, the lender will look to sell it to recover their losses. Therefore, popular models of two-wheelers often have lower rates of interest since their resale value is much higher.

In most cases, if your credit history is good, lenders will be willing to negotiate a lower rate of interest for your two-wheeler loan. Bajaj Finserv Two Wheeler Loans, available on Finserv MARKETS, even offers customers with exceptional credit track records special schemes for repaying their loans!

Read more on how you can get the best comprehensive deal on 2 wheeler loan only at Finserv MARKETS.

“Finserv MARKETS, a subsidiary of Bajaj Finserv, is a one-stop digital marketplace that has been created for consumers on the go. It offers 500+ financial and lifestyle products, all at one place. At Finserv MARKETS, we understand that every individual is different. And that’s why we have invested in creating a proposition – Offers You Value. A value proposition that ensures you get offers which are tailor made for you. We also offer an amazing product range and unique set of online offers across Loans, Insurance, Investment, Payments and an exclusive EMI store. Be it in helping you achieve your financial life goals or offering you the latest gadgets, we strive to offer what you are looking for. From simple and fast loan application processes to seamless and hassle-free claim-settlements, from no cost EMIs to 4 hours product delivery, we works towards fulfilling all your personal and financial needs. What’s more! Now enjoy the same benefits in just one click with our Finserv MARKETS App.”

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Bajaj Finserv Direct Limited ("BFDL"), erstwhile Bajaj Financial Holdings Limited is a registered corporate agent of Bajaj Allianz Life Insurance Company Limited and Bajaj Allianz General Insurance Company Limited under the IRDAI composite registration number CA0551 valid till 10-Apr-2021. BFDL also renders services to Bajaj Finance Limited (‘BFL’) and Bajaj Housing Finance Limited (‘BHFL’) (referred hereinafter as ‘Lending Partner’) in sourcing of customers, providing preliminary credit support activities, fulfilment services and post-acquisition customer services related to lending business. Registered Office: Bajaj Auto Limited Complex, Mumbai – Pune Road, Akurdi, Pune – 411 035 CIN: U65923PN2014PLC150522