Arjit Chalmela
Arjit Chalmela
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5 Factors Significantly Impacting Two-Wheeler Loan Interest Rates

A bike is the most convenient vehicle to swift past Indian roads. It is an economical purchase to sustain the traffic and commute daily. This makes it the sought-after option for many people starting their driving journey. However, the outrageous price for good models might feel discouraging. If you want to own a two-wheeler but are low on budget, do not fret. Seeking credit is always an option.

Moreover, a customized financial product like a Two-Wheeler Loan works perfectly. Lenders offer this with minimal formalities against a competitive interest. The interest is the cost you pay for borrowing funds. It significantly impacts your repayment journey. Hence, you must make a good bargain on the interest rate while applying for the Loan. You do this efficiently when you learn about the factors affecting it:


Your repayment capacity is an essential concern for the lenders. Hence, they consider your financial stability. This involves getting details about your monthly income. You must submit your salary slips, bank statements, and other revenue documents. Banks verify this and space out your EMIs accordingly. The interest applies to the approved amount based on your income.

Credit Score

This is a three-digit number that indicates your repayment behaviour. It is a measure of your ability and willingness to clear impending debts. The rank gets recorded from your past experiences with Loan repayments. Prospective lenders get to access it from the credit bureau. They use it to understand your credit history and offer a reasonable Two-Wheeler interest rate. A clean record of never missing EMIs and staying on top of payments gets favored.

Down Payment

Lenders typically finance up to 70% to 80% of the vehicle cost. You need to bear the remainder. While this is the standard, you may choose to expand your contribution. When you do this, the interest rate gets reduced. Contrarily, seeking maximum financing results in getting charged with higher interest. Hence, accumulate sufficient funds for the down payment and borrow cautiously.

Loan Tenure

The longer you stay indebted, the higher risk for the lenders. This is because the changing financial scenario might lead to defaulting over the period. Banks and lending institutions mitigate this risk by charging higher interest. They encourage shorter-term and reward the applicants with lower interest.


As the bike you purchase also acts as collateral, lenders evaluate its model. High-end two-wheelers have a better resale value. Therefore, they attract favorable interest on the Two-Wheeler Loan. On the other hand, depreciating or sub-standard models lead to higher interest.