Points to keep in mind when applying a Two Wheeler Loan


Two-wheelers offer a convenient, quick, and easy way to travel to your destinations. When it comes to these motorcycles, you have a plethora of options offered by various brands. However, if you want one with the best features and safety provisions, expect to pay a high price.

Thankfully, with a two-wheeler loan, you need not stress about making a big lump sum payment. Today, you can easily apply for this financing with a lender of your choice. With attractive interest rates and flexible repayment tenures, you can tailor the loan to suit your needs.  

Read on to learn a few points you must remember and avoid when you apply for a two-wheeler loan.

Compare the Interest Rates

While applying for a bike loan, the first thing you must check is the lender`s bike loan interest rate. Leading lenders in India offer competitive interest rates, ranging from 6.49% p.a. to 28.30% p.a. 

Checking the bike loan interest rate rate is important because it affects your overall cost of borrowing. So, a lower bike loan interest rate will help you save more, while a higher rate increases your interest outgo.

However, the interest rate depends on factors such as your bike model, income, employment type, credit score, etc. Hence, researching and comparing a few loan options is ideal before selecting a lender.

Be Aware of the Additional Fees and Charges

In addition to interest, you will have to pay other fees and charges when availing a two-wheeler loan. These are loan processing charges, documentation charges, late payment charges, stamp duty, etc. Knowing all these charges is crucial before you finalise any lender.

Keep in mind that you can negotiate for better terms, and even get waivers on certain fees. Lenders offer such perks to applicants with excellent financial profiles or long-standing customers.

Calculate Your EMI Before Applying

Once you have compared various lenders, calculate your EMI well in advance to plan your repayment structure. This helps you assess your overall borrowing costs for your two-wheeler loan. 

You can use the bike loan EMI calculator to calculate your EMIs quickly and accurately without much hassle. Enter the loan amount you plan to borrow, tenure, and interest rate in the calculator and easily estimate your EMI.

Simply adjust the tenure and loan amount to get the most affordable loan terms.

Build Your Creditworthiness

When you apply for a two-wheeler loan, lenders check your credit report to assess your creditworthiness. All lenders will have a minimum score, and you must meet this criterion. Getting a bike loan can be difficult if you do not have a good credit score. 

Lenders decide your interest rate based on your credit score. So, building a healthy score is essential before applying for a bike loan. To improve your credit score, you can:

  • Keep your credit utilisation ratio below 30%
  • Clear any existing loan obligations
  • Avoid making multiple loan enquiries simultaneously
  • Correct any discrepancies on your credit report

With these steps, you can boost your credit score and improve your chances of getting a loan.

Check Your Eligibility

When you apply for a two-wheeler loan online or offline, you must check the eligibility terms set by the lender. This helps you avoid rejections or unnecessary delays in loan approvals. Here are the general eligibility criteria for a bike loan:

  • Individuals between 18 and 65 years can apply
  • You must earn a minimum income of ?10,000 per month
  • You must have a minimum employment of one year
  • You must reside in the same city for a minimum of one year

Note that these eligibility criteria can vary from one lender to another. So, check with your lender before applying for a loan.

Keep all Your Documents Ready

When you apply for a two-wheeler loan, you must have the following documents ready:

  • Identity Proof: Aadhaar card, PAN card, voter`s ID card, passport, and driver`s licence
  • Address Proof:  Aadhaar card, voter`s ID card, passport, driver`s licence, and utility bills
  • Income Proof: 3-month bank statement, latest ITR, 3-month salary slip, Form 16, or business documents
  • Recent passport-size photographs
  • Loan application form

While you can get a bike loan quickly after approval by submitting these documents, remember that lenders may ask for additional documents if required.

Apply for a Loan When There is a Seasonal Offer

Most loan providers offer seasonal discounts on bike loans, especially during festivals. You can take advantage of such offers and schemes to get zero or low processing fees, lower interest rates, instant approval, or pre-approved loans.

Consider Making a Sizeable Down Payment 

While you may get a two-wheeler loan that doesn’t require a downpayment, it is always better to make one. This is because it reduces the principal amount borrowed, and this lowers your interest outgo, which leads to savings. Moreover, when you make a sizeable downpayment, lenders are more likely to offer better terms.

Things to Avoid When Applying for a Bike Loan

Here are a few points you must avoid when opting for a two-wheeler loan.

  • Not Submitting All Documents: The biggest mistake not to make when applying for a loan is to submit incomplete documents to the lender. As these documents provide the details of your income and financial capacity, lenders set suitable terms for your loan based on these documents.
  • Applying With Multiple Lenders: When you apply for a loan with multiple lenders, each one checks your credit report, which is a hard inquiry. With multiple hard enquiries, your credit score will drop and this could affect your chances of getting approval.
  • Not Reading the Lender’s Terms You may rush the loan process and take the first loan offer without reading the lender`s terms and conditions. This can increase your costs and make the loan unfeasible. So, make sure to read the terms properly before applying with a lender.
  • Borrowing More Than You Need In most cases, these loans will cover the cost of the vehicle, registration, and insurance fees. Pay attention to the terms of the insurance policy, as this is an easy area to overspend. You may find that the readily offered policies have addons that you don’t need or won’t ever utilise.  

With the above points in mind, you can buy your favourite bike easily and smartly. Remember, taking a two-wheeler loan or any form of credit is a serious financial decision. So, you must take a loan that fits your repayment capacity and ensure you repay the loan on time without putting undue stress on your finances.

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