Are you tired of getting around town on foot or perhaps frustrated with demanding auto-rickshaw drivers who simply refuse to take you to any destination without paying an “extra” amount?
Then, the minute you decide to take the bus, you find yourself waiting for long hours at the bus stop for a bus that may or may not come and if it does, it looks as though ten thousand sardines have been stuffed into a tiny box. People over people, literally, breathing down each other’s necks. Eww!
Unfortunately, you can’t act prissy because you don’t have any other means of transport. But hold on. Here’s an idea. – ever thought about buying a two-wheeler instead?
Buying a two-wheeler is not only easy on the pocket, it also serves the purpose of getting you from one place to another easily. Without having to spend a fortune on petrol, you can cover large distances within a city on a scooter or bike.
So, no more standing in the dust and heat at a bus stop or depending on atrocious auto drivers to take you anywhere. Getting a two-wheeler will solve all these problems and more.
Additional Reading: Tyred Of Walking? Here Are 10 Benefits A Two-Wheeler Loan Can Offer You
Let’s take you through the entire process of buying a two-wheeler.
Depending upon your daily usage, you should select the kind of two-wheeler you want to buy. If you plan to ride to work daily, then you can roughly calculate the distance taken to travel each way. It’s important to consider the mileage on the bike you plan to buy.
And if your place of work is a fair distance away, choose a two-wheeler that’s sturdy and comes with a higher cubic centimetre (CC) Engine. You could also opt for a scooter if you intend to only ride within the city limits.
After identifying the type and model of the two-wheeler that you’d like to buy, the next step would be to ascertain the cost. Typically, a two-wheeler would cost you anywhere from Rs. 40,000 and upwards.
If you think you cannot completely pay for your two-wheeler upfront and will have to apply for a Two-wheeler Loan, then let us explain to you how these loans work.
Additional Reading: Two-wheeler Loans – Everything You Need To Know
Features of a Two-wheeler Loan
Margin of Finance
On an average, most two-wheeler loans cover 90% of the cost of the vehicle. This means that you only need to make a down payment that is equal to 10% of the vehicle’s cost.
Loan Partnerships with Dealers
Auto-financiers often have special deals for motorcycle and scooter dealerships to provide convenient loans. They are often cheaper than ones that are opted for separately. Besides, as a buyer, you can negotiate for freebies and added benefits from the dealer if you’re taking a loan through a partnered bank.
Relieving Financial Burden
Loans give you the ability to diversify your financial burden. You don’t have to pay a huge amount in one month and then starve for the next few months.
With a two-wheeler loan, you can spread out the EMIs over a year or more, depending upon the tenure of the loan. Some companies also accept post-dated cheques for loan repayments which is also convenient for many.
Annual Income Leverage
A two-wheeler loan can be availed by an individual even if his/her annual income is as low as Rs. 50,000. This means you don’t have to necessarily be in the taxable bracket to take these loans.
Additionally, since the tenure of this loan can be stretched up to four years, it creates a balance while you’re paying your monthly instalments, thus, not hampering your monthly budget.
Prepayment or early foreclosure charges
Most banks do not have any prepayment charges if you are able to repay the loaned amount before your tenure ends. However, this varies from bank to bank and depends on their policies.
This is a great way to repay debt without paying a penalty for early repayment.
Covering other costs
A two-wheeler loan often covers the cost of accessories, insurance and even registration. This means you not only get finance for the vehicle but also essential expenses as well.
Flexibility in loan tenure
Depending upon your budget you can set EMIs that don’t burden you on a monthly basis. Borrowers are given tenure options ranging from 12 to 48 months. A longer tenure will help minimise the effects of a financial crunch and also avoid help you avoid repayment defaults.
8. Credit Score
If a two-wheeler loan is going to be your first ever loan, then this loan will open your file for your Credit Score. Since most two-wheeler loans are easy to get and don’t take too long to repay, it will have a positive impact on your Credit Score.
Additional Reading: Planning To Buy A Bike? Here’s What You Need To Know
Eligibility Criteria For Two Wheeler Loans
- Age – Most banks allow any individual above the age of 18 years to avail a loan. However, some banks may insist that you have to be above 21 years of age.
- Employment – It is absolutely essential that the borrower should be a salaried or self-employed individual. As long as you show you’re earning a steady income, you will be eligible to take a two-wheeler loan.
- Employment Tenure – This is a way to gauge your stability. Banks prefer borrowers that have been employed for more than six months with a company in case of a salaried individual.
- Minimum Income – The minimum income requirement is relatively low for two-wheeler loans especially if you live in urban areas and are salaried. But, it’s always a good idea to check prior to availing the loan.
- Residential Requisite – Often, loan defaulters tend to change their address multiple times to avoid recovery agents. This is why banks prefer if a borrower has a stable residential address.
- Permanent Numbers – Banks require you to provide the landline number of your residence or office so they can get in touch with you.
- Credit Score – Having a good Credit Score increases your chances of availing loans and Credit Cards. That is a parameter for banks to check your credit history and then make a judgement on whether or not you should be allowed to take a loan.
- Documentation – Like any other loan application, you will be required to provide relevant documents to apply for this loan.
Documentation Required For a Two-Wheeler Loan Application
- Photo Identity Proof – This could be any valid document that has a photo of you on it, like a passport, PAN card, or Aadhaar Card.
- ID Proof – Any document that proves your identity will suffice, like a driver’s licence, voter ID, passport, Aadhaar Card, or PAN card.
- Address Proof – A document that states your permanent residential address will work. If you don’t have a valid ID proof, a utility bill will also do.
- Employment Proof – Your company’s offer letter, salary slips, and bank statements.
Two-Wheeler Loan Interest Rates
Two-wheeler interest rates vary from lender to lender. It is purely based on the bank as well as a range of other factors, such as the tenure chosen, your credit report and even the vehicle you have chosen to buy. The rates generally vary between a minimum of 11% to 18.25%.
Remember to consider all the charges and fees levied on your two-wheeler loan when applying.
|SI No||Name Of The Bank||Features||Interest Rate|
|1.||SBI Two-Wheeler Loan||· Advance EMI is not required
· 85% of on-road price of the two-wheeler is provided as LTV
· Optional SBI life cover available
· Repayment period is a maximum of 36 months
|8.60% above base rate i.e. 17.90% per annum|
|2.||HDFC Two-Wheeler Loan||· Processing fee is 50% lower for HDFC account holders
· Repayment option ranges from 12 to 48 months.
· EMIs can be paid through standing instructions, ECS, or post-dated cheques
|Starts at 10.50% goes up to 14.85%|
|3.||Bajaj Finserv Two-Wheeler Loan||· Pre-approved loans available for existing customers
· Option of partial foreclosure available
|Low – Below 27%
Medium – Between 27% to 30%
High – Above 30%
|4.||Axis Bank Two-Wheeler Loan||· Special schemes for Axis bank customers
· Practical, affordable, and attractive interest rates
|17% per annum on a monthly reducing basis|
|5.||ICICI Bank Two-Wheeler Loan||· Part-payment of the loan is not allowed
· 0.25% charged as processing fee
|12.50% since March 2013|
|6.||Bank Of India Two-Wheeler Loan||· The loan can be used for both new and used vehicles
· The loan can also be availed by non-resident Indians
|13.95% per annum|
|7.||Muthoot Capital Two-Wheeler Loan||· 30-minute approval
· Special schemes that require no proof of income
|Starts from 24% up to 28%|
|8.||Induslnd Bank Two-Wheeler Loan||· Hassle-free documentation
· Complete transparency and no hidden costs
· Repayment options with tenures ranging from 12 to 60 months
|Between 21% to 29%|
|9.||Syndicate Bank Two-Wheeler Loan||· Loan up to 95% of the on road price inclusive of registration charges, insurance, and road tax, plus cost of accessories
· Easy eligibility for (even for those with a minimum annual income of Rs. 50,000)
|Base rate + 2%|
|10.||Vijaya Bank Two-Wheeler Loan||· Get up to 100% of the cost of the vehicle
· Maximum repayment period is 84 months
|Base rate + 0.40% = 10.05% (floating)|
Fees and Charges Applicable on Two-wheeler Loans
What most people fail to understand about a loan is that apart from the money you’re borrowing, there will be other charges levied, which are sometimes ‘hidden’. Watch out for the following fees and charges:
Processing Fee: A processing fee is charged for processing or initiating the request for the loan and is mandatorily charged by most banks. They are generally calculated in percentages of the total loan amount. These fees are non-refundable. The amount charged varies from bank to bank.
Prepayment Fees: This is the charge levied when a borrower pays out the loan well in advance of the expiry of the loan tenure. For bike loans, this charge is generally very low and sometimes even non-existent.
Late-payment Fees: As the name suggests, this fee can be easily avoided with a little bit of planning. The borrower is generally charged this fee if he/she misses the due date for loan repayment.
Charges for Conversion: If you wish to change your two-wheeler loan from a floating rate of interest to a fixed rate or vice versa, there will be a fee involved. This is basically a charge for switching, based on your requirements. In other words, it is a flexibility fee.
Administrative Fee: This is often a very deceiving name for this fee because it is often confused with processing charges. This charge takes care of the administrative cost to the bank for processing your loan, which is not part of the processing fees.
Still think a car is a better option than a two-wheeler? Check out our offers on Car Loans.