A two-wheeler loan offers the flexibility of owning a bike without bearing the immediate pressure of finance. Now, with the zero-down-payment schemes, owning a bike is easier than ever. Nevertheless, it’s essential to check the interest rate before committing to a bike loan.

This is an important factor that determines how affordable it will be for you. 


Even a small fluctuation in the interest rate would affect the way you pay your installments and, consequently, the amount you end up spending on the loan. This article covers five factors that determine the interest rates of two-wheeler loans.

  1. Down Payment

The down payment is part of the money initially paid to purchase the bike, while the remaining amount of money is financed. 

The down payment you make affects the two-wheeler loan interest rates directly. Suppose you want to get a loan for a bike of Rs. 50,000. If you make Rs. 10,000 as a down payment, interest will be charged on the rest, Rs. 40,000. But if you pay Rs. 15,000 initially, the interest will only be charged on the remaining Rs. 35,000. Interest on Rs. 35,000 will definitely be lower than interest on Rs. 40,000.

  1. Income

Creditors assess your income to evaluate the amount of debt you will be able to repay. The regular income source of salaried employees is considered a favourable feature of their two-wheeler loan application. But, if your income is inconsistent, you would require further documentation to demonstrate stability.

The interest rate offered to you depends on your income. A higher income helps you to get a loan with lower interest. The applicants may be required to have a steady job and show two years of tax returns to get a Bajaj auto credit bike loan.

  1. Loan Tenure

The length of a loan has a great influence on a bike loan interest rate. Higher interest rates occur when tenures are longer. In long repayment time, lenders fear that the borrowers may not be able to fulfil their loan obligations so they increase the interest rate to ensure their risk is curbed. 

A shorter tenure could bring lower interest rates, but the EMIs are larger, which could strain your budget. To find a balance, you should use a two-wheeler EMI calculator and determine a combination that will work best for you. This method guarantees that your loan is under your control. Plus, it will prevent you from slipping into debt and secure the best interest rates. 

  1. Credit Score

Having a good score in credit is an important factor in getting a low-interest rate for bike loans. A good credit score signals to lenders that you are a responsible person when it comes to managing your finances. It gives them confidence in your payback capabilities and lowers your interest rates.

In contrast to this, a bad credit score may cause you to pay more interest or be rejected for a loan altogether. This is why one must be punctual in paying the bills, avoid defaults, and conduct good credit utilisation in order to be considered a worthy candidate and get the best interest rates when needed.

Must Read: Which Commuter Bike to Choose for City Use?

  1. Model of the Bike

The type and model of the two-wheeler you select also impact the rate of interest you will be charged. Th interest rate on the loan for the bikes that are considered hot sellers is usually low because their resale value is higher compared to the other models.

Conclusion

 

The key to choosing the best two-wheeler loan interest rates is understanding the factors involved. Remember that the bike of your dreams is within your reach. Discover reputed lenders like Bajaj Auto Credit for valuable loan facilities that guarantee competitive interest rates. With Bajaj Auto Credit bike loan, you can bring your favourite bike home without any financial pressure.