Bike Loan Interest Rate Offered By Banks & NBFCs In 2023
Bike Loan Interest Rate Offered By Banks & NBFCs In 2023: Two-wheeler loans have become increasingly popular and attractive to customers who wish to purchase a motorcycle. These loans are specifically designed for this purpose and operate in a similar fashion to a personal loan.
You borrow a predetermined amount and then make payments, with interest, over a specific period until the loan is fully repaid. The bike loan interest rate can vary depending on several factors such as the lender, your credit score, and the loan terms.
Typically, the interest rate on a bike loan is higher than that of a car loan but lower than that of a credit card or unsecured personal loan. Additionally, bike loans are usually for smaller amounts and have shorter repayment periods compared to car loans. Banks, NBFCs, and financing companies provide bike loans with varying repayment terms.
Some lenders may also require a down payment or collateral to approve the loan. However, before applying for a two-wheeler loan, you must meet specific eligibility criteria such as providing proof of income and residence and having a good credit score. In the case of a low credit score, you may still be eligible for a bike loan, but the interest rate will likely be higher.
Banks vs. NBFCs – Interest rates
According to reports, around 75% of two-wheelers are purchased through bike loans. Prospective bike owners usually approach banks or NBFCs to apply for a two-wheeler loan. In fact, more than 97% of the market share for two-wheeler loans belongs to banks and NBFCs. These institutions enjoy significant popularity, owing to highly competitive bike loan interest rates and generally favourable repayment terms.
However, before applying for a two-wheeler loan, it’s important to weigh the pros and cons of both options. While banks are generally considered the safest options, the bike loan interest rates they offer rely on various factors, such as RBI policy rate changes and related market forces.
Conversely, the interest rates offered by NBFCs are influenced by factors such as the retail prime lending rate (RPLR) and the bike loan interest rates offered by other competitors. Thus, NBFCs generally offer better interest rates and more generous repayment terms. Bike loan interest rates can range from 6.85% to 29% per annum, depending on several factors.
Two-wheeler loan Eligibility Criteria
To successfully apply for a two-wheeler loan, it’s important to consider the eligibility criteria. While different lending entities may have different criteria, in general, there are basic requirements that need to be met.
These include age (you should be at least 21 years old and not more than 65 years old at the time of closing the loan), employment status (you should be gainfully employed as a salaried or self-employed individual), income (you should earn at least ₹15,000 per month), and credit score (you should have a respectable credit score of 700 or above).
These factors also affect bike loan interest rates. For instance, if you’re in your 20s or 30s, you’re more likely to get a bike loan at a nominal interest rate, while interest rates may be higher if you’re nearing retirement. Similarly, if you have a good credit score (750 or above), you’ll be considered a responsible borrower, and you may be able to secure competitive bike loan interest rates.
Nominal Interest Rates
To ensure that you get the most competitive interest rates when applying for a two-wheeler loan, there are certain steps you can take. Firstly, it’s crucial to repay all of your existing debts and reduce your liabilities as this will have a positive impact on your credit score. Wait until your credit score reaches 750 before applying for the two-wheeler loan.
Additionally, this also reduces your debt-to-income (DTI) ratio, which should be below 40%. Secondly, it’s important to make sure that you never miss any payments, especially credit card bills and other EMIs. Thirdly, you should carefully consider the eligibility criteria before applying for a bike loan. Certain lenders may have more lenient terms and conditions than others, such as not having a minimum credit score requirement or a low monthly income mandate.
This allows you to get competitive bike loan interest rates even with a low credit score. Fourthly, if you have a good relationship with your existing bank, talk to them and check if they can offer attractive bike loan interest rates and better repayment terms. Finally, you can use an online bike EMI calculator to find the best repayment terms based on your repayment capacity. By finding the ideal combination of EMI, interest rate, and repayment tenure, you can choose a lending entity that offers favourable repayment terms.
When choosing between a bank or NBFC, it’s important to consider several factors, with the most critical being the bike loan interest rate, followed by the two-wheeler loan eligibility criteria and repayment terms.
To assist you in making an informed decision, we’ve provided interest rates offered by different banks and NBFCs, which you can compare to select the most suitable lending institution. You can also streamline the process by visiting Bajaj Markets, where you can apply for a two-wheeler loan in a few simple steps.