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If you are planning to purchase a two-wheeler, it is important to consider factors such as Two-Wheeler Loan interest rates, EMI, and more, before hitting the road. Read ahead for valuable insights to make an informed decision!
What are Two-Wheeler Loan Interest Rates?
One of the major considerations you need to take when applying for a Two Wheeler Loan is the interest rate. This is all important as it determines the EMI amount and the impact on your monthly budget.
The interest rate’s calculation is dependent on your credit history. Your EMI will include the principal amount of the Loan along with the interest rate.
Many banks and Non-Banking Financial Companies (NBFCs) such as TVS Credit provide Two Wheeler Loans, allowing people to fulfil their dream of purchasing it.
Under Two-Wheeler interest rates, you can also select on what suits you the best.
Types of Two-Wheeler Loan Interest Rates
Depending on the lender, two wheeler or Bike Loan interest rates can be either a variable one or a fixed rate of interest.
In such a case, the choice between a fixed rate and a variable rate relies on the level of risk that comes with each.
Fixed interest rate tends to be higher than variable rates. However, fixed rates are not subject to change irrespective of changes in market conditions.
For instance, if you opt for a fixed rate of 13% p.a., it will stay constant throughout your Loan’s duration.
On the flip side, variable interest rates vary depending on market rates. Rates tied to the Marginal Cost of funds-based Lending Rate (MCLR) change each time the Reserve Bank of India changes the repo rate.
This leads to an increase or decrease in the rates with time. However, variable interest rates are typically lower than fixed rates.
After finalising a bike interest rate, the next step in applying for a Bike Loan is to understand the eligibility criteria for doing so, which includes documentation.
Documents Required to Apply for a Bike Loan
Documentation required to apply for a bike or Two Wheeler Loan varies depending on whether you are a salaried or self-employed individual.
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KYC documents
such as Photographs, Identity proof (Passport/PAN card/Driver’s License/Voter ID/Aadhar Card), Address and Age proof, remain constant.
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Last 3 month’s salary slips/Form 16/Latest ITR
is valid for salaried individuals whereas self-employed individuals must submit their latest Income Tax Return (ITR)
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Employment/Offer Letter
or TDS Certificate must be submitted for Salaried and Self-Employed persons respectively.
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Last 3 month’s Bank Statement
must also be submitted by both categories.
Click here for more information regarding the required documents:
Tips to Lower Down your Bike Loan Interest Rate
When applying for a 2-wheeler loan, you should aim to avail one at the lowest possible rate. Here are a few tips that can assist with this.
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Brush up your Credit Score:
As your credit score plays an essential part in deciding the interest rate you are presented with, try to clear up your credit history first. If you lack good credit, take measures to improve it before you try to qualify for a Loan.
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Check on your Debt-to-Income Ratio:
Try to improve your current debt status as this shows you what part of your current income goes toward the repayment of loans and credit card bills.
Attempt to clear your existing Loans and bring down this ratio. The lower your ratio, the more are your chances of getting good interest rates.
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Negotiate with your Lender:
In some cases, negotiating with your chosen lender can help you get better rates. This applies especially in situations where you might not fulfil all the eligibility criteria.
For example, in case you don’t have sufficient income, but are expecting a salary hike shortly, submitting relevant proof of this can help you avail good interest rates.
Other factors affecting your Two-Wheeler Loan Interest Rates
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Credit Score:
One of the most crucial factors that determine your interest rate. If your credit score is more than 700, you may qualify for lower interest rates. Having poor credit scores may lead to high-interest rates or sometimes even rejection of the Loan applicant.
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Income Level:
Banks and lenders may have a minimum income requirement for Loan approval. If you have a lower income than the criteria, you may be offered higher rates of interest.
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Place of Work:
Your place of employment or the organisation you work for, can influence the interest rate you are given. Employment in a reputed company increases your chances of holding a stable job and drawing a stable income generally translating into lower interest rates.
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Nature of Employment:
Different interest rates are levied by lenders depending on whether you are self-employed or salaried.
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Age:
Age can be all important in deciding on your interest rate. For example, if you are nearing retirement, your loan interests may be hiked up due to reduced capacity to repay the Loan.
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Existing Relationship with the Lender:
A pre-existing relationship with the Loan provider, may aid you in getting a better rate of interest and Loan terms.
Breaking down FAQs:
1. How to calculate Two Wheeler Loan EMI?
Typically, Loan EMI calculators require the following inputs: Loan Amount, Interest Rate and Repayment Tenure.
2. What is the maximum tenure of a Two Wheeler Loan?
Loan terms generally range from a minimum of 12 to a maximum of 60 months
3. How does credit score impact Two Wheeler Loan interest rates?
Having low credit scores can lead to higher interest rates.
4. How to apply for a Bike Loan?
There are various ways to apply for a Bike Loan including online, through a dealership etc.
Click here to apply: or download the TVS Credit Saathi app to know more.
5. What is the minimum amount for a Bike Loan down payment?
A Two-Wheeler Loan can be applied with zero down payment.
