How To Get The Best Two-Wheeler Loan Interest Rates In India?
When it comes to obtaining a Two-Wheeler Loan in India, securing the best interest rates is a key consideration. Lower interest rates can significantly impact the overall cost of the loan and make it more affordable.
To ensure you get the best Two-Wheeler Loan interest rates in India, it is crucial to understand the factors that influence these rates and take proactive steps to enhance your chances of getting approved. From maintaining a good credit score to comparing offers from multiple lenders, this article will guide you through effective strategies to help you secure the most favourable interest rates and make your two-wheeler purchase a sound decision.
Eligibility for Two-Wheeler Bike Loans
Eligibility is a major consideration before filling out the loan application. It also plays a role in determining the Two-Wheeler Loan interest rate and the corresponding bike EMI. Various banks and financial institutions have distinct eligibility requirements to consider while applying.
- The applicant must be at least 21 years old (at the time of application).
- Both salaried and self-employed individuals are eligible.
- The borrower must have been employed for at least one year.
- The applicant must be able to present income stability proof.
Essential Documentation for Bike Loan
To apply for a bike loan, the necessary documents vary based on if you are a salaried or a self-employed professional:
For salaried individuals
- Application Form
- Photographs
- Identity Proof
- Address Proof
- Age Proof
- Bank Statements
- Signature Verification
- Latest Salary Slip / Form 16
- Employment Stability Proof
For self-employed individuals
- Application Form
- Photographs
- Identity Proof
- Address Proof
- Age Proof
- Bank Statements
- Signature Verification
- Income Tax Returns (ITR) for the latest one year
- Business Stability proof / Ownership proof
Factors to Consider for Motorcycle Loan Interest Rates
Numerous factors influence the interest rate on loans, though their impact may not be uniform. Some factors have a significant effect, while others have a minimal influence. These factors include:
Loan Tenure
The loan tenure is when the entire loan amount, including interest, must be repaid. The loan duration matters because a longer tenure may result in a lower interest rate (and vice versa), but it could also increase the overall cost of the loan. Therefore, choosing the ideal loan tenure is essential for obtaining the most favourable interest rate for a two-wheeler loan.
Credit Score
As for any loan, your credit score significantly influences the interest rate. A poor credit rating may require you to pay a higher interest rate and vice versa.
Credit History
Excellent credit history is necessary to secure the best interest rate. If you have previously defaulted on a loan, don’t be surprised if you have to pay a higher interest rate.
Monthly Income
Your earnings are vital in determining interest rates, as lenders assess your ability to repay the loan within the specified timeframe. A satisfactory income level may help you obtain a more favourable loan rate and overall loan terms.
Employment Type
The nature of your job or occupation also plays a role in determining the interest rate. Lenders may offer lower interest rates to government employees or employees of reputed organisations, while self-employed individuals might need to pay a higher interest rate.
Financial Behaviour
Your bank account statements also play a crucial role. If you are able to maintain a sufficient balance in your bank account, you may receive a better interest rate on the Two-Wheeler Loan.
Interest Rate Types
Bike Loan interest rates can be classified into two main categories –
- Fixed Interest Rate – Regardless of market fluctuations, fixed interest rates remain unaltered throughout the loan tenure. For instance, opting for a 10% fixed interest rate will stay the same until the loan tenure ends.
- Variable Interest Rate – These rates are subject to fluctuations according to the prevailing market conditions and other factors.
Fixed or Variable Interest Rate – Which is the Better Option for a Bike Loan?
In most cases, fixed interest rates for two-wheeler loans are favoured by individuals because they provide stability and an EMI amount that remains constant for the duration of the loan. This lets you plan your monthly budget and keep up with your EMI payments. Moreover, fixed rates can be advantageous if you anticipate a future increase in interest rates, allowing you to lock in the current rate and avoid paying a higher rate later.
Although you might be tempted to go for variable interest rates as they are usually lower than fixed rates, you should remember that these rates can change and sometimes lead to higher EMI payments.
