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Two Wheeler Loan

If you’re looking to take a loan to buy a motorbike, check out the various two-wheeler loans available to you. Take a look at some of the banks that offer you these loans. Compare interest rates, processing fees, and your EMIs. Read on to find out the best option for you.

State Bank of India

Key Highlights:

  • Get loans for both regular two-wheelers as well as superbikes.
  • Get up to 90% of the value of your bike financed.
  • Get easy loans with low minimum income requirements.
Interest rate EMI Processing fee Payment
16.45% p.a. Rs.3,538 At the discretion of the bank Rs.1,27,367

Note: The figures in the table above have been calculated based on a principal amount of Rs.1,00,000, an interest rate of 16.45% p.a., and a tenure of 3 years. The processing fee percentage has also been factored into the EMI calculation. The interest rate may change at the bank’s discretion.

Bank of India

Key Highlights:

  • Loans available for both normal two-wheelers and superbikes as well.
  • Financing is available for new 2-wheelers and used 2-wheelers.
  • Repayment period of up to 5 years.
Interest rate EMI Processing fee Payment
7.85% p.a. Rs.2,125 1% of the loan amount (minimum Rs.500 & maximum Rs.10,000) Rs.1,27,982

Note:The figures in the table above have been calculated based on a principal amount of Rs.1,00,000, an interest rate of 10.00% p.a., and a tenure of 5 years. The processing fee percentage has also been factored into the EMI calculation. The interest rate mentioned in the table is the current rate of interest charged by the bank.

HDFC Bank

Key Highlights:

  • Punjab National Bank
  • Get financing of up to 100% of the value of your vehicle.
  • Enjoy flexible repayment options.
  • Get fast and easy loan approvals and disbursements.
Interest rate EMI Processing fee Payment
11.42% p.a. to 22.45% p.a. Rs.5,764 Maximum 3% of the loan amount Rs.2,11,988

Note: The figures in the table above have been calculated based on a principal amount of Rs.1,50,000, an interest rate of 22.45% p.a., and a tenure of 3 years. The processing fee percentage (3%) has also been factored into the EMI calculation. The interest rate may change at the bank’s discretion.

Punjab National Bank

Key Highlights:

  • Special 2-wheeler loan scheme for women borrowers.
  • Extended repayment period of up to 5 years (60 months) for scooters and motorcycles.
  • Low minimum monthly income criterion.
Interest rate EMI Processing fee Payment
9.8% Rs.2,125 0.5% of loan amount
Rs.1,000
Rs.1,28,482

Note: The figures in the table above have been calculated based on a principal amount of Rs.1,00,000, an interest rate of 10% p.a., and a tenure of 5 years. The processing fee percentage has not been factored into the EMI calculation. The interest rate may change at the bank’s discretion.

Andhra Bank

Key Highlights:

  • Get financing for up to 90% of the value of your vehicle (90% for women and 85% for others).
  • Get a special loan scheme for women borrowers.
  • Enjoy low loan processing fees.
Interest rate EMI Processing fee Payment
10.05% p.a. to 10.30% p.a. Rs.2,127 1% of the loan amount (minimum Rs.500 and Maximum Rs.5,000). Taxes are extra. Rs.1,28,130

Union Bank of India

Key Highlights:

  • You can get up to 85% financing on the on-road price of your vehicle.
  • The bank offers up to Rs.10 lakh for purchasing two-wheelers.
  • There is no prepayment fee if you prepay using your own funds.
Interest rate EMI Processing fee Payment
10.30% p.a. onwards Rs.4,954 0.50% of the loan amount (maximum Rs.15,000) plus taxes Rs.1,17,170

Note:The figures in the table above have been calculated based on a principal amount of Rs.1,50,000, an interest rate of 11.60% p.a., and a tenure of 3 years. The processing fee percentage (0.50%) has been factored into the EMI calculation. The interest rate may change at the bank’s discretion.

Indian Bank

Key Highlights:

  • Get financing of up to 85% of the value of your motorbike.
  • Get the benefit of low processing fees.
  • Enjoy a repayment period of up to 60 months (5 years).
Interest rate EMI Processing fee Payment
12.10% p.a. Rs.3,241 0.23% of the loan amount subject to a maximum of Rs.10,236 Rs.1,79,960

Note: The figures in the table above have been calculated based on a principal amount of Rs.1,50,000, an interest rate of 12.10% p.a., and a tenure of 3 years. The processing fee percentage (0.23%) has been factored into the EMI calculation. The interest rate may change at the bank’s discretion.

Corporation Bank

Key Highlights:

  • Get up to Rs.1 lakh to buy the motorbike you want.
  • Get financing for two wheeler insurance, registration, and accessories as well.
  • Enjoy low processing fees.
Interest rate EMI Processing fee Payment
10.25% p.a. Rs.2,137 0.50% of the loan amount (minimum charge is Rs.500) Rs.1,28,722

Note: The figures in the table above have been calculated based on a principal amount of Rs.1,00,000, an interest rate of 10.25% p.a., and a tenure of 5 years. The processing fee percentage (0.50%) has been factored into the EMI calculation. The interest rate may change at the bank’s discretion.

Canara Bank

Key Highlights:

  • Women borrowers can get special interest rates.
  • Low processing fees.
  • Extended repayment tenure of up to 7 years (84 months).
Interest rate EMI Processing fee Payment
10.45% p.a. Rs.2,151 0.25% of the loan amount subject to a minimum of Rs.1,000 and a maximum of Rs.5,000) Rs.1,30,082

Note: The figures in the table above have been calculated based on a principal amount of Rs.1,50,000, interest rates of 10.45% p.a., and a tenure of 5 years. The processing fee percentage (0.25%) has been factored into the EMI calculation. The interest rate may change at the bank’s discretion.

Two-wheeler loan eligibility

Lenders have certain eligibility criteria they expect you to fulfil before they process your application. These may vary from one lender to another. Some of the general eligibility criteria are as follows:

Requirements Salaried Individuals Self-employed individuals
Age Minimum – 21 years at the time of application Maximum – 65 to 70 years at the end of the loan tenure Minimum – 21 years at the time of application Maximum – 65 to 70 years at the end of the loan tenure
Monthly income Rs.7,000 Rs.6,000
Credit score Above 750 Above 750
Loan amount Up to 100% of the value of the vehicle Up to 100% of the value of the vehicle
Residential stability Must be staying at the current address for at least 1 year Must be staying at the current address for at least 1 year
Work experience At least 1 year At least 1 year

Note: These criteria may be different for different lenders. Check with the lender of your choice before applying.

Documents required for two-wheeler loans

Every lender requires you to submit certain documents while applying for a loan. Some of the general documents required are given below:

Particulars Salaried Individuals Self-employed individuals
Identity Proof PAN card, voter’s ID, passport, driving license PAN card, voter’s ID, passport, driving license
Address Proof Utility bills, passport, etc. Utility bills, passport, etc.
Income Proof Salary slips, IT returns, bank statements Bank statements, IT returns, audited financial statements

Note: The documents required may differ from one lender to another. Check with your lender for what they require you to submit.

What is a two-wheeler loan?

Banks offer different types of loans for various purposes. For example, there are home loans for buying property, personal loans that can be used for a variety of purposes, gold loans for buying gold, etc. Similarly, a two-wheeler loan is one that can help you buy a motorbike especially when you don’t have the funds for it.

What are the advantages of taking a two-wheeler loan?

Applying for a loan to buy the bike you’ve always wanted can benefit you in a number of ways. Some of them include:

  • Get the funds you need to buy the bike you want.
  • Use a guarantor or co-applicant to get the money you need.
  • Get funds to buy superbikes as well.
  • Get affordable interest rates.
  • Enjoy a wide spectrum of loan repayment periods.
  • Repay your loan in affordable EMIs.
  • Pay every EMI on time and build your credit history.

Use BankBazaar’s two-wheeler EMI calculator to know your EMI

BankBazaar brings you a unique EMI calculator to help you find out exactly what your EMI will be. The tool helps you find out how much you have to repay every month in just a few minutes. The steps of how to use this tool are given below:

  • All you need to do is to input the amount you want to borrow, select the interest rate charged by the lender, and the tenure of the loan.
  • You can also select whether or not you intend to prepay parts of your loan. Also, you can type in any processing fees that you have to pay.
  • After this, simply hit “Calculate”. Your EMI will be shown in a few seconds. You will also get the amortisation table for your loan. This table will show you how you have to repay the loan over the tenure you’ve chosen.
  • The table will show you the interest and principal components of each EMI along with how much interest you will pay over the loan period. This helps you find out how much the loan will cost you.

Tips for successful two-wheeler loan application

A few loan applicants have had their applications rejected by lenders. This is not a pleasant feeling, nor is it good for your credit score. We’ve put together a list of tips that can help you apply successfully for a two-wheeler loan. These are as follows:

  • Determine the exact loan amount required: You should assess your needs and calculate exactly how much money you need to buy the bike you want. You should never apply for an amount larger than what you need.
  • Check your eligibility and compare your options: Once you decide how much money you need to borrow, take a look at all the loan options that you are eligible for. This is important. Never apply for a loan for which you don’t qualify. This will automatically get your application rejected. Check your eligibility for a two-wheeler loan and make sure you fulfil all the criteria.
  • Check your credit score: Your credit score is one of the most important factors that determine loan approval. Lenders usually reject applications with low credit ratings. So, if your credit history is poor, look at improving it before applying for the loan.
  • Get a guarantor or co-applicant: If your credit score is not up to the requirement of the lender, see if you can get a guarantor or co-applicant. Having a guarantor or co-applicant who has good credit can help you get the loan you want.
  • Fill your loan application properly: Make sure your application is fully filled with all the details your lender requires. An incomplete application or an application that has wrong information may be rejected.
  • Submit all the necessary documents: While submitting your loan application, make sure you submit all the documents the lender requires as well. If you don’t submit the required papers, your application may be rejected.
  • Try applying with your existing lender: If you already have a good existing relationship with a bank, try taking the loan from them. This good standing may help you get a loan even if you don’t fulfil all their criteria.

Points to remember while applying for a two-wheeler loan

Now that you know how you can successfully apply for a motorbike loan, let’s check out what you need to keep in mind while applying for one. These points can help you find the right loan and avoid paying more than you should.

  • Do your research well: This is the first step before you apply for a motorbike loan. Make sure you do your research well. Compare all the options that various lenders offer you. Compare interest rates, processing fees, repayment options, and other loan terms. This will help you find the best and cheapest option.
  • Choose your tenure wisely: The tenure of your loan will determine how much you have to repay each month. Make sure you can afford your EMI. This means you have to be wise about choosing your tenure. A shorter tenure will help repay the loan faster. But your EMIs will be high. So, choose according to how much you can afford to pay off every month without facing a financial crunch.
  • Choose an affordable interest rate: Your interest rate determines the overall cost of your loan. It also has an impact on your EMI. Choosing a loan with a low rate of interest can help keep your EMIs low. It will also make your loan cheaper.
  • Compare floating rates versus fixed interest rates: Some lenders may offer you both floating interest rates as well as fixed interest rates. Floating rates change as per the changes in the market rates. Fixed rates remain constant irrespective of market rate changes. That said, floating rates are usually lower than fixed rates.
  • Compute your EMIs before applying: When you compare your loan options, make sure you compare the respective EMIs as well. Choose a loan that gives you an affordable EMI with a convenient repayment period.
  • Ask about prepayment fees: If you plan on prepaying or foreclosing your two-wheeler loan at any point, find out the charges for the same. Some lenders may charge you a fee for this while others may not. Prepaying your loan can help you save interest costs.
  • Read the terms and conditions properly: This is also called the fine print. Read your loan offer document thoroughly and go through every single term and condition before you sign it. The fine print may reveal hidden charges and fees that may otherwise never be mentioned. Knowing these terms can help you avoid paying heavy penalties.

Do’s and don’ts of applying for a two-wheeler loan

Let’s now look at the do’s and don’ts of applying for this loan.

Do’s Don’ts
Do your research well before you apply Don’t apply for multiple loans at the same time
Make sure you are eligible for the loan you’re applying for Don’t apply for a loan simply because you get an attractive welcome gift
Compare interest rates and find the best option Don’t forget to fill in the application form properly
Compare processing fees and other charges Don’t sign the loan documents without reading them thoroughly
Evaluate your credit score before you apply Don’t choose an EMI you cannot afford
Submit all the required documents without fail Don’t forget to pay your EMIs on time
Read the offer document carefully before signing it Don’t forget to prepay your loan if you can

How to improve your chances of getting a two-wheeler loan

In this section, we’re going to take a look at how you can improve your chances of getting your loan approved. The loan requirements differ from one lender to another. Sometimes, you may find it hard to get the loan you’re looking for. The following suggestions may help:

  • Clean up your credit: Lenders pay a lot of attention to your credit score when evaluating your loan application. If you have a high score, you stand a better chance of getting the loan you want. You should check your credit report every now and then to see if you’re making any errors. Taking corrective steps will help you clean up your credit.
  • Balance your debt-to-income ratio: Your debt-to-income ratio compares your current debt situation to your current income. It shows how much of your monthly income is currently being used to pay off loans and bills. The lower this ratio is, the better are your chances of getting your loan. So, look at paying off a few loans before applying.
  • Get co-signers if needed: Sometimes, getting a co-applicant for your loan can help you get what you’re looking for. This helps especially if you have a poor credit score. You can also get another individual to guarantee the loan on your behalf. Keep in mind that the co-applicant and the guarantor will be held accountable if you don’t repay the loan on time.
  • Don’t apply for multiple loans: When you apply for multiple loans simultaneously, lenders will realise that you may not take the loan they offer. This will make them reject your application. Keep in mind that multiple rejections can hurt your credit rating.

Take a look at some of the most commonly asked questions regarding two-wheeler loans.

Two-wheeler loan FAQs

  1. How can I apply for a two-wheeler loan?

    There are different ways of applying for such a loan:

    • Directly applying at the physical branch office of a lender.
    • Applying online.
    • Applying at the time of purchasing the bike (at the showroom).
  2. When should I take a loan to buy a bike or scooter?

    This depends on how much money you have of your own. If you can finance the entire amount by yourself, don’t take a loan. But if you have only a part of the money, you can apply for a loan for the rest of the bike’s value.

  3. Can I get a loan to fund the whole value of the vehicle?

    The answer to this depends on the lender from whom you take the loan. Most lenders will offer you a loan for only up to around 80% to 90% of the value of the vehicle. You will have to bring in the rest of the money on your own. That being said, there are a few lenders who offer 100% financing. However, this may come at the cost of additional terms and conditions.

  4. What costs will a scooter or bike loan cover?

    Most lenders offer loans that cover accessories, insurance, and registration charges for your vehicle. In addition to this, you may also get additional perks if the lender has a tie-up with a particular two-wheeler brand.

  5. Should I take two-wheeler insurance when I buy a bike? Is it mandatory?

    Yes, insurance is mandatory when you buy a vehicle. The showroom you buy from will not release your vehicle until you pay the insurance as well. This is usually built into the total on-road cost of your bike.

  6. Should I choose a floating interest rate or a fixed interest rate?

    Sometimes, banks may offer you the choice of a fixed or floating interest rate. A fixed rate remains constant irrespective of market rate changes. A floating rate changes when the market rate changes. People usually prefer taking floating rates because they are lower than fixed rates.

  7. What tenure should I choose?

    The tenure you choose determines your EMI. A longer tenure will make your EMIs more affordable. But you will also be in debt for a long time. Shorter tenures result in higher EMIs, but you’ll be able to pay off the loan faster.

  8. What is two-wheeler loan prepayment? How does prepayment help?

    Prepayment is paying an EMI or multiple EMIs together before the amounts are due. Every time you prepay a part of your loan, it helps reduce the outstanding principal. This reduces your interest cost as well. So, prepaying your loan can help you save money.

  9. Is there any fee for prepayment?

    Some lenders may charge you a fee when you prepay your loan while others may not. Before prepaying your loan, find out what it will cost you. If the costs are covered in the interest you save, then go ahead and prepay your loan.

  10. Should I offer collateral when I take a loan to buy a 2-wheeler?

    No, you don’t have to offer collateral when you take this loan. The vehicle acts as collateral till you repay the loan in full. This is called hypothecation.

  11. What will happen if I am not able to repay my loan on time?

    If you don’t pay the EMIs on time, the bank may repossess your vehicle. Since your bike or scooter is hypothecated, the bank has every right to confiscate your vehicle to make good the losses they suffer.

  12. Can I sell my bike before I repay the loan?

    No, you cannot. Since your bike is under hypothecation, you cannot sell it till you get an NOC from the bank stating that you’ve paid back the loan in full.

  13. What should I do after I repay my loan?

    Once you pay the final instalment and terminate your loan, you should follow the steps given below:

    • Get the No Objection Certificate (NOC) from the bank.
    • Get Form 35 from your lender and fill it up.
    • Get your trade certificate.
    • Submit your application at your Regional Transport Office (RTO) along with the documents mentioned above and your original Registration Certificate (RC), and copies of your driving license, PUC, insurance, and Aadhaar card.
    • Pay the required fee and follow the other instructions at the RTO.
    • Go and collect your new RC on the given date.
  14. Can I get a loan if I’m a student and have no income?

    Yes, you may be able to get a loan if you’re a student. In such cases, you can get a co-applicant such as a parent or a close relative to guarantee payment on your behalf. Do keep in mind that not all lenders offer loans to students.

NEWS

  • Two-wheeler dealers in Bangalore are recommending vehicle leasing to wary customers

    As per reports, automotive dealers are requesting customers who are wary of taking loans from banks to go for leasing vehicles. OTO Capital, a vehicle leasing firm has recently stated a substantial increase in partnership with automotive dealers in Bangalore.

    Since the restrictions of COVID-related lockdown have been eased, demand from customers has increased. However, most customers are inclined toward leasing vehicles rather than taking two-wheeler or auto loans from banks. This is primarily due to the uncertain economic condition looming over the country.

    In the two-wheeler market, most customers have shown interest in affordable models and are looking for alternative finance options other than just vehicle loans.

    7 July 2020

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