Over the last decade, the Indian two-wheeler industry has experienced significant growth. According to a report provided by the Ministry of Road Transport & Highways (MoRTH), until March 31st, 2013, the number of registered two-wheelers in India stood at 132.6 million. As of August 3rd, 2022 almost a decade later there are more than 210 million registered two-wheelers in the country. This amounts to an increase of around 6.5 percent annually. With the unprecedented demand for two-wheelers and subsequent increase in sales volumes during this period, the two-wheeler segment now contributes about 7 percent of the overall manufacturing GDP in the country.
There are several key drivers of this growth, including the high fuel efficiency of two-wheelers, along with the ease with which individuals can now apply for two-wheeler loans. Banks, captive financiers and NBFCs (pan-India and regional) offer two-wheeler loans that provide up to 100 percent funding of on-road prices of these vehicles. Around 75 percent of the two-wheelers bought today are funded by loans. Additionally, a closer look at the two-wheeler loan industry illustrates the growing demand for two-wheeler loans. Expected to grow at a compound rate of at least 11 percent annually, the two-wheeler loan segment is projected to be valued at $ 12.3 billion by 2025.
As two-wheeler loans are essentially asset-backed loans, the interest rates are comparatively lower and range from 8.3% to 28.3%. Furthermore, the loan tenure can range from 1 year to 7 years (most lenders offer up to 5 years of repayment period), resulting in affordable EMIs. Thus, opting for a two-wheeler loan to buy a new vehicle is both prudent and convenient. However, you must assess different options and choose a lending entity that offers low interest rates, as this has a significant bearing on the EMI amount you pay every month. Here is how you can avail of the best bike loan interest rates.
Gold Rate
Saturday 22 Feb. 2025
Maintain a Good Credit Score
Lenders prioritize individuals with a good CIBIL score, which can be any score above 700. Having a good credit score gives you certain privileges, such as enjoying faster approval times and availing loans at low interest rates. Lenders tend to levy additional interest as a risk premium if the credit score of an applicant falls below the 650-700 threshold. Hence, you must maintain a good credit score – anything above 750 lets you avail of loans at attractive interest rates.
Employment Status and Income
Certain lenders might look at you more favorably if you are a government employee and offer lower interest rates. Self-employed individuals, however, are scrutinized and assessed carefully and might not enjoy similar benefits. Furthermore, the amount you earn as a salary also plays an important role in availing of low interest rates. In the eyes of a lender, an applicant with a higher annual income poses a lesser threat of defaulting compared to an applicant with a relatively lower annual income.
Talk to Your Bank Executive
To get low bike loan interest rates, your relationship with the lender can make a marked difference. You can talk to your bank executive and enquire about two-wheeler loans and corresponding interest rates. As you already have an established and fruitful relationship with the bank, you may enjoy nominal interest rates, which might not be possible with other lenders. Additionally, you can also check if you are eligible for a pre-approved loan, which usually translates to lower interest rates.
Collaborations and Tie-ups
Certain automobile showrooms and dealers have tie-ups with banks and NBFCs. You can enjoy several benefits – from faster approval times to low interest rates – if you choose lenders that have tie-ups with such dealers or brands.
Loan Amount and Tenure
Intuitively, the higher the loan amount, the higher the interest rate. Similarly, the longer the repayment period, the lower the interest levied on the loan amount. It is important that you strike the right balance between the loan amount and the repayment period. This can be achieved by availing of the services of a bike EMI calculator. You can check the EMI amount you might have to pay by changing the other variables, which will help you plan better.
It is also important that you compare bike loan interest rates being offered by different lending institutions. Companies like Bajaj Finserv offer two-wheeler loans at attractive interest rates with no minimum CIBIL score requirement in place. Moreover, you can get up to 100 percent financing of the on-road price of the two-wheeler, with tenures extending up to 60 months (5 years). You can use any bike EMI calculator available online to calculate the ideal tenure – loan amount – EMI relationship so that you can avail of low interest rates.
