Two-wheeler Loan Rates Unveiled: What Every Rider Should Know

When purchasing a two-wheeler through a loan, understanding two-wheeler loan interest rate and terms is key. This article covers the two-wheeler loan rates in India, the factors that influence them, and tips to secure the best deal.

Understanding Two-wheeler Loans

A two-wheeler loan is a secured loan where the vehicle serves as collateral. Lenders provide 70%-90% of the vehicle’s on-road price, and you repay in fixed EMIs over 12 to 48 months. These loans are popular for making vehicle purchases affordable.

Two-Wheeler Loan Providers

Here’s a quick look at the interest rates offered by some of the leading two-wheeler loan providers in India:

What Affects Two-wheeler Loan Rates

The interest rate on your two-wheeler loan determines how much you will pay over and above the principal loan amount. Several factors affect the rate you are offered:

Credit Score

Your credit score significantly impacts your interest rate. A score of 750+ signals low risk, often resulting in a lower rate, while a low score may lead to a higher rate or loan rejection.

Loan Tenure

Loan tenure affects the interest rate. Shorter tenures usually have lower rates but higher EMIs, while longer tenures may have slightly higher rates due to increased lender risk.

Down Payment

A larger down payment reduces the loan amount and lowers the lender’s risk, potentially securing a lower interest rate. Typically, a 10%-20% down payment is required, though some lenders may accept less.

Lender’s Policy

Interest rates vary by lender. Banks usually offer lower rates due to their financial strength, while NBFCs and online lenders may charge higher rates for more flexible terms.

Type of Two-wheeler

The make, model, and age of the bike affect the loan rate. Newer bikes with higher resale value often have lower rates, while older or premium bikes may attract higher rates due to lower resale value and higher costs.

Income and Employment Stability

Lenders assess your income and employment history to gauge repayment ability. A stable income can help secure a lower interest rate, while self-employed borrowers may need proof of business stability, like tax returns or bank statements.

Average Interest Rates on Two-wheeler Loans in India

In India, the two-wheeler loan interest rate typically ranges from 9% to 15% per annum. The rate you receive depends on the factors mentioned earlier. Here’s a rough breakdown of the rates you might encounter:

• Best Interest Rates: For borrowers with a good credit score (750 and above) and the purchase of a new bike, interest rates can range from 9% to 12% per annum.
• Average Interest Rates: For most borrowers with an average credit score or those purchasing a used bike, interest rates typically range from 12% to 15% per annum.
• Higher Interest Rates: If you have a lower credit score or are purchasing a bike that’s older or requires a large loan amount, the interest rate can go beyond 15%.

How to Secure the Best Two-wheeler Loan Interest Rate

To get the best deal on your two-wheeler loan, you need to consider several strategies to secure the lowest interest rate. Here are some tips that can help:

Check Your Credit Score

Lenders first check your credit score when offering a loan. A score of 750+ helps secure a lower interest rate. If it’s lower, consider improving it before applying.

Compare Loan Offers

Interest rates for two-wheeler loans vary by lender. Use online comparison platforms to compare rates, fees, and terms to find the best deal for your financial situation.

Choose a Shorter Loan Tenure

Longer tenures have smaller EMIs but may come with higher rates. If possible, choose a shorter tenure for lower interest rates, as they are less risky for lenders.

Make a Larger Down Payment

A larger down payment reduces the loan amount and the lender’s risk, increasing your chances of a lower interest rate. Aim for at least 10%-20% of the vehicle’s price.

Check for Special Offers

Look out for promotional rates during festive seasons or events. Ensure they align with your needs, and always read the fine print before deciding.

Maintain a Stable Income and Employment History

Lenders prefer borrowers with stable income and job security. Provide clear income proof, such as salary slips for salaried employees or financial documents for the self-employed.

Negotiate with Lenders

After comparing offers, negotiate the interest rate with your preferred lender. A good credit score, stable income, and a large down payment may help secure a lower rate. You shouldn’t hesitate to ask for a better deal.

Conclusion

Your two-wheeler loan interest rate affects your repayment. By understanding the factors, improving your credit score, and comparing offers on financial marketplaces like Bajaj Markets, you can secure a better rate and avoid financial strain.