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Two Wheeler Loan Interest Rate & Charges 2023

The bike loan interest rate in India usually range between 6.85% - 28.30% per annum. The following table gives- a comparison of interest rates, processing fees, prepayment, and foreclosure charges offered by various Banks and NBFC's:


Interest Rates

Loan Amount

Processing Fees

Prepayment charges

Foreclosure charges

Union Bank of India

9.90% - 10.00% 

₹10 Lakhs

0.5% of the loan amount


3% – 10% Based on the time of foreclosure

Bank of India

6.85% - 8.55% 

Up to ₹50 Lakhs

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% 

Up to ₹3 Lakhs

2% of the loan amount + GST


At bank’s discretion

Bajaj Auto Finance

Starting at 8.50%


3% of loan amount


Nil after 12 months

L&T Finance

7.99% - 15.00%

₹20 Lakhs

At L&T discretion

As per the NBFC’s terms and conditions

At lender’s discretion

Punjab National Bank

8.65% - 10.00% 

₹10 Lakhs

0.5% of the loan amount


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

Bank of Baroda

BRLLR + Strategic Premium + 4.00% 

₹10 Lakhs

2% of loan amount minimum Rs.1,000

At bank’s discretion




₹5 Lakhs

Up to 2.5% of the loan amount

5% of the principal amount

6% of principal outstanding

*Disclaimer: Fees and charges are subject to market conditions and financial institution’s discretion.

How to Calculate Bike EMI with Two Wheeler Loan Interest Rate?

Check out the various factors that determine your two wheeler loan interest rates:

EMI = [P x R x (1+R)^N]/[(1+R)^N-1]

Here, P stands for the loan amount or principal, R is the interest rate per month and N is the number of monthly instalments. To calculate the interest rate (R), you need to input the EMI amount (EMI), principal amount (P) and number of EMIs, which is its tenure (N). Let’s understand this with the help of an example. 

Let’s assume you take a loan amount of ₹1,00,000 for a period of 12 months at a monthly EMI of ₹4,707.

When you input the information in the above equation, it will look like this:

4,707 = [1,00,000 x R x (1+R)^12]/[(1+R)^12-1]

On calculation, R will come out to be 12%.

Types of Interest Rate

The interest rates levied on bike loans come in two types.

  • Fixed Interest Rate - Fixed interest rates remain constant irrespective of the market rate change. If you choose a fixed interest rate of 10%, it will remain the same till the end of the loan tenure.

  • Floating Interest Rate - The floating interest rates fluctuate depending on the current market conditions. The marginal cost of a funds-based Lending Rate fluctuates with the change in repo rate. So, with time, your floating interest rate, which is linked to this rate, could change accordingly. Floating rates are comparatively lower than fixed rates. So, most of the borrowers choose floating rates for their two-wheeler loans.

Variable Interest Rate or Fixed Interest Rate - Which is Better for a Two Wheeler Loan?

Generally, fixed interest rates on two-wheeler loans are preferred by most individuals as they offer predictability and financial security. This allows you to plan your monthly budget accurately and stay on top of your EMI payments. Additionally, fixed rates can be beneficial when you foresee a rise in the interest rate in the future and you lock the current rate of interest, so you don’t have to pay a higher rate later.

While floating rates are typically set 1% to 2.5% lower than the fixed interest rate offered by the same lender, they can fluctuate abruptly, causing you to pay more than you can afford in some cases.

Tips to Avail Two Wheeler Loan at Low Interest Rate

While applying for a two wheeler loan, you will always try to get a loan with the lowest interest rate possible. Take a look at the few tips that can help you get lowest two wheeler loan interest rates:

  • Good credit history - Credit score plays an important role in the bike loan interest rate you will be offered. If you don’t have a good credit, the chances to get a low loan interest rate is low. Make sure your credit history is faultless before applying for a loan.

  • Good relations matter - Try taking a bike loan from the bank where you already have a savings account. If you have maintained a very good and warm relationship with them, you can get better two wheeler interest rates.

  • Low debt status - Check your debt-to-income ratio before applying for a new loan. Pay off existing loans and bring down this ratio. This ratio includes the part of current income that is used for repaying credit card bills and other loans. The chances of getting good interest rates are high if you have a low ratio.

  • Better negotiations - Negotiating with your bank can help you get better interest rates in situations where you don’t completely fulfil the bike loan eligibility criteria for loans.

Why Should You Compare Interest Rates Before Applying for a Two-Wheeler Loan?

When you compare two-wheeler loan interest rates offered by various lenders, you can choose a lender offering the lowest two-wheeler interest rate. Not only does it make your two-wheeler loan more affordable, but it also helps you pay your EMIs on time and avoid payment defaults.

Factors that Affect Two Wheeler Loan Interest Rate

Check out the various factors that determine your two wheeler loan interest rates:

  • Annual Income: Most lenders set a minimum income limit to apply for a two wheeler loan. The higher the applicant earns, the lower risk they have of not repaying your loan. If you have a higher level of income, you may get a lower interest rate.

  • Employment Type: The financial institutions offer different bike loan interest rates depending on the applicant being self-employed or salaried. Salaried individuals will be offered bike loans at a lower interest rate compared to the self-employed applicants.

  • Age: The age of the applicant plays a vital role in determining the loan interest rate. If you’re nearing retirement age, you will be charged a higher interest rate because your capacity to repay a loan may be lower compared to young people.

  • Credit Score: One of the most important factors that determine the two wheeler loan interest rate is the applicant’s credit score. If you have a good credit score, you may be able to get a lower interest rate, and a higher interest rate will be charged if you have a bad credit score.

Bike Loan Interest Rate - FAQs

  • ✔️How to get the lowest bike loan interest rate?

    To get the lowest bike loan interest rate, have a good credit history, warm relationship with the bank, and a low debt-to-income ratio.

  • ✔️Will my lender change my bike loan interest rate during the tenure?

    If you opt a fixed interest rate, your lender will not change your bike loan interest rate during the tenure.

  • ✔️What are the main factors that affect two wheeler loan interest rates?

    The main factors that affect two wheeler loan interest rates are your annual income, age, employer, employment type, credit history and your relationship with the lender.

  • ✔️What are the different methods of comparing 2 wheeler loan interest rates?

    You can compare 2 wheeler loan interest rates using online sites’ comparison tables or by visiting websites of different banks offering two wheeler loans.

  • ✔️If I choose a variable rate, how often will it change?

    If you choose a variable rate on your bike loan, the interest rate can change multiple times as it is linked to economic cycles. While there is no fixed time period for variable rate changes, these may happen as often as every month, or quarterly or annually. If your loan has a long repayment period, the chances of interest rates changing are higher than in the case of shorter tenure.

  • ✔️Will my variable interest rate go above the fixed rate?

    Based on the market fluctuations and the economic scenario, variable interest rates can go below or above the fixed rate at any given point in time.

  • ✔️Should I always opt for the loan that offers me the lowest EMI?

    Your loan EMI is calculated on the basis of various factors such as interest rate, loan tenure and principal amount. A low EMI can also mean a longer loan tenure. Thus, you should opt for a loan which is most suitable for you while considering all the factors

  • ✔️What are the documents required to avail of a low bike loan interest rate?

    The interest rate of your bike loan depends on several factors, such as your repayment capacity, credit history and your annual income. These will be ascertained through the documents that you submit to the lender. If you’re a salaried individual, you need to submit the following documents to avail of a bike loan.

    • ID proof

    • Passport-size photographs

    • Address proof

    • Salary slips of the previous three months / Form 16 / latest ITR

    • Bank statement for the previous three months is mandatory

    • Employment or offer letter

    If you’re a self-employed individual, you need to submit the following documents to avail of a bike loan.

    • ID proof

    • Passport-size photographs

    • Address proof

    • Latest Income Tax Return (ITR)

    • Bank statement for the previous three months is mandatory

    • TDS certificate

    • Company details