In India, two wheeler is increasingly becoming the most preferred mode of transport. There are many reasons to it. The crowded public transport system, poor roads in many parts of the country etc. make it necessary for everyone to own a two wheeler. With the global rise in price of crude oil, two wheeler helps in saving the fuel and makes it efficient for consumers. And it’s just not the rural India, travelling by bike or any kind of two wheeler is more convenient in heavy traffics especially in busy metros also. It’s a dream of many youngsters in India to own and ride a two wheeler as soon as they come of age. Easy financing and loan facilities make it affordable and convenient for people to buy a two wheeler which they desire. Before going ahead and choosing the mode of finance for your two wheeler, it’s important to know the features of the loan and interest rates prevailing in the market. Knowing the details makes it easy for you to compare and choose the best deal.
A number of leading banks and financial institutions are offering two wheeler loans and here’s why you should opt for one:
- Most of the banks and financial institutions are offering 90%-100% financing for select two wheelers, and you can therefore own a two-wheeler of your choice with ease without straining your budget
- With more and more NBFCs offering two wheeler loans apart from banks, you or anyone can now avail this loan without any hassle irrespective of the section or class you belong to
- Usually there is no guarantor required for two-wheeler loans
- The loan is usually granted for the on-road price of the vehicle, which means it covers the cost of registration, insurance and accessories.
- The income criteria for availing a two-wheeler loan is very lenient and therefore anyone with having comparatively less income can also take this loan
- These loans usually come with flexible repayment options and therefore you can choose your tenure according to your convenience and affordability
- It involves minimal documentation and has a really quick approval process
Interest rate of the two wheeler loan varies from bank to bank and lender to lender. Interest rate offered by the banks also varies with the type of the two wheeler you are purchasing, category of the applicant, income level and type of the loan applied for.
Two wheeler loans are available in both secured and unsecured loan forms. In case of secured loan, the two-wheeler is the collateral and therefore interest rate is relatively less. Loan can even be availed without any collateral which normally is offered with higher interest rate.
Before applying for any two-wheeler loan, interest rate is one of the most significant factors which you should consider and compare. Here are the factors which have an impact on the interest rate you are being offered for a two wheeler loan:
- Vehicle Type: The interest rate will depend on the type of vehicle you intend to purchase. Whether it is a moped, a motorbike or a high-end two wheeler, the interest rates for each of these categories will vary independently.
- Applicant’s Employment Type: Whether you are a salaried individual or a self-employed one will also have an impact on the interest rates being offered. Self-employed individuals are usually offered loans at higher interest rates in comparison to the salaried individuals because of the uncertainty associated to their employment type.
- Income range: The amount you earn actually affects the amount you will be liable to pay as interest rate. Your income is one of the parameters to determine your credibility for repayments and therefore affects the interest rate you will be charged.
Other factors such as margin and loan tenure also play a significant role in determining your interest rates. The EMIs you will be paying for repayment will depend upon on all these factors.
Current Rate of interest on two wheeler loans offered by some of the leading banks/ financial institutions:
|Name of the Provider||Rate of Interest applicable on Two wheeler loans|
|SBI||Super Bike Loan||MCLR + 3.15% = 12.05% p.a.|
|Two Wheeler Loan||MCLR + 8.75% = 17.65% p.a.|
|HDFC||Super Bike Two Wheeler Loan||IRR- 9.65% to 15%||APR- 9.84% to 15.36%|
|Two Wheeler Loan||IRR- 14.03% to 27.53%||APR- 14.52% to 31.89%|
|Syndicate Bank||MCLR + 2% p.a.|
|Vijaya Bank||MCLR+ 2.20% = 11.65% (floating rate)|
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- Hassle-free and minimal documentation is required. Process of documentation is quite simple.
- There is no waiting period. Most of the banks offer on the spot approval for loans.
- It is very convenient for anyone to buy two wheeler of their need as financing facility is available for 85-95% of the on road price of the two wheeler.
- Two wheeler has become utility based purchase as two wheeler loans are offered to any class of the society.
- Most of the banks offer motor bike loans to people even with a gross annual income of Rs. 50, 000. This liberal income criterion makes two wheeler purchases affordable for people irrespective of their income level.
- Availing two-wheeler loan relieves you from financial stress of making onetime payment for the purchase of motor bike
- Most of the lenders offer the flexibility to choose the tenure or repayment as per your convenience and monthly budget.
- Affordability is the main feature of two wheeler loan as the cost of your dream vehicle can be paid back in affordable equated monthly installments (EMI)
- With most of the lenders or loan providers giving an option to foreclose the loan without any charges or with nominal charges, it comes out to the customer as an added advantage.
- Need based two wheeler purchases are increasing due to an attractive interest rate offered by banks on two wheeler loans.
- As per most of the loan providers, age of the person applying for loan has to be atleast 21 years and the maximum age limit applicable is of 65 years. Age should not exceed the limit at the end of the loan term.
- Applicant can be of any category self employed, salaried or a student. Some providers even offer two wheeler loans to partnership firms, private limited company and public limited company.
- Each bank has different criteria for the income level of an applicant. An income criterion even varies with the category of the applicant.
- An applicant can borrow as low as Rs. 10,000 as two wheeler loan.
- Loan tenures are flexible and usually vary from 12 months to 36 months. Very few of the financial institutions offer 60 months tenures as well.
- Residential stability is also considered as an important criterion by some of the lenders- in such cases, applicant must provide proof of residence.
- Self attested copy of identity proof such as Voters ID, passport, driving license and Aadhar card etc. along with recent passport size photographs.
- Self attested copy of address proof such as passport, bank account statement, Aadhar Card, voters ID card, Driving license, utility bill etc.
- Income proof (if asked for) such as latest salary slips or salary certificate, Form 16, Latest ITR (Income Tax Return) or bank account statement showing the monthly credits of salary etc.
- Proof of residence (self owned/ owned by parents) to be submitted if required. This is usually a requirement for availing a loan for high end bikes.
- Compare the interest rates offered by different banks along with other features of the loan offered.
- Check on the offered interest rates whether it is fixed or floating in nature.
- There are two wheeler loan EMI calculators available online. Make use of the calculator to calculate the affordability of the monthly installment amount.
- Decide the tenure on the basis of your affordability and monthly budget.
- Most of the two wheeler loan provides cover insurance and registration in the loan amount offered. Check such details and features carefully while deciding.
- Some of the banks offer pre approved loans and special interest rates for applicants from agricultural sector. Make sure you check all these schemes.
HDFC Bank: This leading private sector lender which started in 1994 now offers two-wheeler loans to anyone who fulfills the eligibility criteria. It offers special benefits to its account holders for this loan, such as 2% less interest rates and 50% off on the processing fee. The bank currently offers these two types of two-wheeler loans and it charges interest rate according to the following range:
- Superbike Two Wheeler Loan: 9.65% to 15%
- Two Wheeler loan: 14.03% to 27.53%
Punjab National Bank: PNB Bank, founded in the year 1894 offers two-wheeler loan under the scheme name of PNB Saarthi. The bank has a special scheme for women known as PNB power ride under which it offers two wheeler loans to women with lower interest rates. Currently PNB charges according to the following rates:
If the loan is taken from the same branch through which salary is being disbursed or is under check off facility, the interest rate charged is
- BR+3%fora loan tenure of up to 3 years
- BR +3% + TP (Term Premium ) for a loan tenure of more than 3 years
- BR+4%fora loan tenure of up to 3 years
- BR +4% + TP(Term Premium ) for a loan tenure of more than 3 years
UCO Bank: Founded in 1943, this government-owned commercial bank offers two wheeler loans and charges the following as interest rate on the loan amount:
- For the general category it is 1 year MCLR (currently 8.60%) + 4.40%
- A rebate of 1% will be granted on interest rate to account holders with full liquid collateral security
- A rebate of 0.50% on the interest rate will be granted to account holders having 50% liquid collateral security
Bajaj Finserv Bank: Two wheeler loans from this bank are offered under their Auto Finance Division called Bajaj Auto Finance which started in the year 1987. It offers unique benefits such as easy pay-in-cash options, prime lending program and special preapproved offers. It has a unique way of deciding interest rates, all the customers are categorized into high, medium or low bands according to the following parameters:
- Bajaj Two wheeler the borrower intends to purchase
- Borrower’s profile
- Loan Amount
- Details of the residence
- Low: Less than 27%
- Medium: 27%-30%
- High: More than 30%
Andhra Bank: The bank also offers loans to sons and daughters for the purchase of a two wheeler if the parent is a co-applicant and has income according to the specified criteria. The eligibility criteria for salaried individuals to avail a two wheeler loan form Andhra bank is, a minimum of 40% take home pay after deducting the EMIs of the proposed loan. The bank offers a maximum of Rs. 5 lakhs as loan amount. The interest rates will vary according to the tenure you have opted:
- For loan tenure of up to 3 years i.e. 36 months it is MCLR+ 1.80%
- For loan tenure more than 36 months/3 years and less than 60 months/5 years it is MCLR+ 1.80% + 0.25%
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