Bike loans from several lenders are assisting everyone in realising their dream of owning a two-wheeler. These loans have low interest rates, making them affordable. If you intend to buy a bike soon by taking out a two-wheeler loan, compare the two-wheeler loan interest rates given by various lenders in India. Bike loan interest rate varies depending on the borrower’s profile, repayment capacity, annual income, and loan type. So it is critical to understand the two wheeler interest rates for loans before applying for a bike loan.
Types of Interest Rate
Interest rates on two-wheeler loans are classified into two types:
Floating interest rates
The floating interest rates change according to market conditions. The Marginal Cost of Funds-Based Lending Rate varies with the repo rate. As a result, your floating interest rate, which is linked to this rate, may alter over time. Floating rates are less expensive than fixed rates. As a result, the majority of borrowers opt for floating rates on their two-wheeler loans.
Fixed interest rates
Fixed interest rates are consistent regardless of market rate fluctuations. If you choose a fixed interest rate of 10%, it will remain constant until the debt is paid off.
Is a variable interest rate preferable to a stable interest rate?
When applying for a bike on instalment, you may be given the choice of choosing between a variable and a fixed interest rate. The bank itself provides this service. To pick between these two, you must first understand the level of risk involved with each.
The fixed rate of interest is usually higher than the floating rate of interest. But they remain consistent and do not alter in response to changes in market rates. Floating or variable interest rates, on the other hand, fluctuate according to market conditions. When the RBI changes the repo rate, the rates associated with the Marginal Cost of Funds Based Lending Rate (MCLR) fluctuate as well.
Factors Influencing Two Wheeler Loan Interest Rates
The annual interest rates for bike loans range from 6.85% to 28.30%. The following elements mentioned below influence your bike loan interest rates:
Annual Income
Most lenders have a minimum income requirement for obtaining a two-wheeler loan. The higher the applicant’s income, the less likely they are to default on your loan. A lower loan rate may be available if your income is higher.
Employment Status
Depending on whether the applicant is self-employed or salaried, financial institutions provide varying bike loan interest rates. Salaried candidates will be awarded bike loans at a lower interest rate than self-employed applicants.
Age
The applicant’s age is an important factor in establishing the loan interest rate. Because your ability to repay a loan may be decreased as you approach retirement age, you may be charged a higher interest rate.
Credit Score
The applicant’s credit score is one of the most essential criteria determining the two wheeler loan interest rate. If you have a strong credit score, you may be able to acquire a cheaper interest rate, however if you have a negative credit score, you will be charged a higher interest rate.
Place of work
When qualifying for a two-wheeler loan, the organisation you work for is also important. This will decide your loan’s interest rate. Working for a reputable firm indicates that your career is stable, and you will be able to pay off the loan much more easily. As a result, the interest rate will be reduced.
How to Get a Two Wheeler Loan with a Low Interest Rate?
When applying for a two-wheeler loan, you will always seek the lowest possible interest rate. Consider the following techniques for obtaining a bike on instalment with the lowest interest rates:
Good credit history: Your credit score will influence the interest rate on your bike loan. If you don’t have strong credit, your prospects of getting a low loan interest rate are slim. Before applying for a loan, double-check your credit history.
Good understanding with the lender: Consider getting a bike loan from a bank where you already have a savings account. You might receive better two bike interest rates if you have kept a really nice and warm relationship with them.
Debt-free status: Before applying for a new loan, check your debt-to-income ratio. Pay off previous loans to reduce this ratio. This ratio includes the portion of current income used to pay off credit card debt and other loans. If you have a low ratio, you have a better chance of earning favourable interest rates.
Better negotiating: Negotiating with your bank can help you receive better interest rates when you don’t meet all of the loan eligibility standards.
Once you’ve decided on the bike you want to buy, you can look through the offers from reputable creditors to get the best bike loan interest rate. Knowing about interest rates on bike loans and how they work can help you choose the best offer and repayment term that best suits your needs.
