Know All About the Determinants of Bike Loan Interest Rates

bike loan

You can get your dream bike with a two-wheeler loan at a reasonable bike loan interest rate with manageable monthly payments. Equated monthly installments, or EMIs, are a convenient way to pay back a two-wheeler loan. However, you need to ensure that you are eligible and meet all the requirements, as financial institutions consider several factors before giving out a loan.

Factors that Have an Impact on Bike Loan Interest Rate

You must consider a few things before applying for a two-wheeler loan. But if you wish to avoid getting a loan, search ‘second hand bike finance near me‘ on Google and look into other alternatives. 

Aspects that affect the rate of interest on two-wheeler loans are-

  • Down Payment

The part of the money you pay over your loan balance is the down payment. Most financial institutes will only lend you 70% of your bike loan. The remaining 30% will be your responsibility as the down payment. However, many lenders offer loans with no down payment, but the Bike loan interest rate rises because of the increased risk. So, the interest rate you receive is based on the size of your down payment. 

  • Income

Your income is crucial in deciding the loan’s interest rates with your lender. Your net income is compared to the EMIs on your bike loan to determine the risk associated with lending the desired loan amount. A salaried person typically receives a cheaper interest rate from financial institutions since their income is reliable and steady. Some lenders provide you with two financing options that are designed to make bike loans accessible for everyone. They are:

  1. No Income-based loans: To apply for this loan, borrowers do not need to provide income documentation.
  2. Income-based loans: These loans are based on income documentation.
  • Type of Vehicle

Your vehicle type is considered when evaluating your two-wheeler loan interest rate. Such rates vary according to the price of the bike you select. Due to the higher loan amount, superbikes typically have cheaper interest rates. Also, popular models have higher resale values, which makes it simpler for the loan provider to find a buyer for it and recoup losses if you default on the loan.

  • Age

Most financial organisations require that the applicants must be 21 years old to be eligible for a two-wheeler loan. If you are below 21, you can apply with a guarantor or a co-applicant for the loan.  

  • Repayment Ability 

The fixed EMI evaluates an applicant’s repayment ability. When figuring out the loan-to-value ratio computation, all of the borrower’s current debts are considered.

  • Tenure of the Two-wheeler Loan

The two-wheeler loan interest rate will also rise if the loan term is extended. It is because lenders believe that taking a long time to repay a loan may increase the chances of non-repayment. Defaulting on a loan is viewed as a risk connected to the loan. To account for the risk and pay any losses, loans with higher repayment tenure are subject to higher interest rates.  

  • Credit Score

Your credit score is a crucial factor in deciding your eligibility for a loan. Based on your credit history, a credit score is a three-digit number that evaluates your creditworthiness. It’s essential to have a credit score of at least 750 to be eligible for a bike loan.

Two-wheeler Loan Eligibility

  • At the time of loan maturity, the applicant’s minimum age must be 18, and the maximum age must be at least 65. 
  • Applicants must have lived in the same home for at least a year to demonstrate residential stability. 
  • Candidates must have worked steadily for at least a year in a job or be self-employed with two years of IT returns. 
  • The candidate must have a high CIBIL score from the credit bureaus. 
  • Applicants should provide a permanent phone number, KYC, and other relevant documentation. 

Plan your budget with a two-wheeler loan EMI calculator beforehand to experience a smooth procedure. 


Unquestionably, in India, motorcycles are the most preferred means of transportation. Now you can get cheap two-wheeler loan interest rates and simple repayment schedules, making such loans incredibly popular. Because of this, they are a good choice for anyone who wishes to purchase a bike. 

However, ensure you go through all the variables that can impact your interest rate if you’ve considered a bike loan. 

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