Bike Loan Interest Rates

Securing a two-wheeler loan at a competitive interest rate can significantly reduce overall borrowing costs. With rates starting from just 0.99% p.a., choosing the right loan makes it easier to manage EMIs and stay within your monthly budget. Interest rates for bike financing may vary depending on factors such as credit score, income level, loan amount, and repayment tenure.

Understanding how lenders determine these rates, along with the associated charges, can help you make better financial decisions. By comparing options across banks and NBFCs, it becomes easier to identify suitable loan offers and take advantage of special schemes, discounts, or flexible repayment terms.

The table below provides information about current interest rates and processing fees on bike loans offered by various lenders on Bajaj Markets:

Disclaimer: The above-mentioned details are accurate as of date and subject to change at the lender’s discretion.

Understanding the factors that influence bike loan interest rates of all banks & NBFCs can help you secure a better deal. Here are the key factors lenders usually consider:

Annual Income

Most lenders set a minimum income limit for individuals applying for two-wheeler finance. The higher the applicant earns, their risk of not repaying the loan can be lower. If you have a higher level of income, you may get a lower interest rate.

Employment Type

Financial institutions offer different bike loan interest rates depending on the applicant being self-employed or salaried. Salaried individuals may be offered bike loans at a lower interest rate compared to self-employed applicants.

Age

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

Credit Score and Credit History

One of the most important factors that determine the rate of interest on a two-wheeler is the applicant’s CIBIL score. If you have a good credit score, you may be able to get a lower interest rate, while a higher interest rate may be charged if you have a bad credit score.

Workplace

The reputation and stability of your workplace can influence loan approval and interest rates. Working for a well-established organisation might result in lower interest rates, as lenders consider such applicants more financially secure.

Loan Amount

The loan amount directly impacts your EMIs and overall interest payable. Higher loan amounts may lead to higher interest rates, as they represent a greater risk for the lender.

Loan Tenure (Duration)

A longer loan tenure reduces your monthly EMIs but increases the overall interest cost. Conversely, shorter tenures result in higher EMIs but lower total interest payments, offering a better deal overall.

Down Payment or Loan-to-Value (LTV) Ratio

A higher bike down payment reduces the loan amount, decreasing the lender’s risk and often leading to lower interest rates. Loans with a higher LTV ratio might attract higher interest rates.

Age and Model of the Two-wheeler

Newer models or those with better resale value typically attract lower interest rates. Older or less popular models may carry higher rates due to depreciation concerns.

Type of Two-wheeler (Standard, Luxury, Electric)

The type of bike influences the loan terms. Standard and electric bikes may have lower interest rates due to affordability and eco-friendly incentives. However, luxury bikes might carry higher rates due to their higher risk profile.

Financial Institution or Lender

Two-wheeler loan interest rates typically vary among banks and NBFCs as they may have different policies. Often, NBFCs are more flexible when assessing your eligibility for the loan but may offer slightly higher rates than banks.

Existing Debt or Loan Obligations

If you have other ongoing loans, lenders may consider you a higher-risk borrower, as your Debt-to-Income (DTI) Ratio is higher. This might result in higher interest rates on your bike loan or stricter terms, as your repayment capacity could be stretched.

Special Schemes and Promotions

Lenders often provide festive offers or promotional schemes, reducing interest rates or waiving processing fees. This usually makes loans more affordable during specific periods.

Existing Connection with the Lender

Having an existing relationship with the lender, such as a savings account or a past loan, may lead to preferential rates, faster approval, and simplified documentation processes.

When applying for a bike loan, the interest rate can significantly affect your overall repayment amount. Lenders generally offer two types of interest rate structures:

Fixed Interest Rate

• The rate remains unchanged for the entire loan tenure, so your EMIs tend to stay the same throughout.

• This stability can make monthly budgeting simpler for you and may reduce the risks of interest rate hikes.

• Fixed rates can suit borrowers who prefer predictability and have a low tolerance for rate fluctuations.

• However, remember that you might not benefit if market rates fall after you lock in a fixed rate.
   

Floating/Variable Interest Rate

• The rate can vary during the loan and is typically linked to an external benchmark (e.g., RBI’s repo rate or MCLR). 

• Your EMI may increase or decrease as the benchmark changes, and initial rates are often lower than fixed interest rate offers. 

• This option may suit borrowers willing to accept some risk to benefit from lower costs if rates decline. 

• Note that floating rates can lead to higher total interest if market rates rise over the loan tenure.

Here is a list of the different charges associated with a two-wheeler loan that you should be aware of, alongside the interest rate:

Processing Fee

Lenders typically charge a one-time processing fee when you apply for a bike loan. It is usually a percentage of the loan amount. The fee is used to cover the administrative costs of the loan.

Prepayment Charges

If you choose to repay the loan before the tenure ends, some lenders impose a penalty for prepayment. It's essential to check these terms if you plan on early repayment.

Late Payment Fees

Missing an EMI payment can attract hefty late fees or penalties. These charges can accumulate, increasing your overall borrowing cost.

Documentation Charges

Some lenders charge a fee for loan documentation and paperwork, which may be overlooked but adds to the loan's total cost.

Understanding your bike loan EMI is essential for smart financial planning. Your EMI depends on several factors, including the loan amount, interest rate, and repayment tenure. Even a slight change in the bike EMI interest rate or loan duration can increase your monthly burden or total repayment. 

Use our two-wheeler loan EMI calculator to calculate your bike EMI before applying for a two-wheeler loan that fits your budget and long-term financial goals.

Reference of all T&C necessarily refers to the terms of the Partners as regards to pre-approved offers and loan processing time amongst other conditions.