Things To Consider Before Choosing A Two-wheeler Loan

A new bike in the market entices you but you do not have sufficient funds to fulfil your dream. What do you do in such cases, give up on your dream or find a way to buy a new ride for yourself without burning a hole in your pockets? If you are thinking about the latter, two-wheeler loans are the right choice for you.

Two-wheeler loans are for everyone. They have minimal documentation and can be availed by individuals from any financial background. The repayment tenure for bike loans is flexible and the interest rates are usually between 8 to 28 per cent. However, applying for a loan should never be a hasty decision. There are several factors that you must consider before making this decision.

Things to consider before choosing a two-wheeler loan

Your eligibility

Though the eligibility criteria for two-wheeler loans are quite relaxed as compared to other types of loans, it is wise to check the eligibility criteria before applying for it. Two-wheeler loan applicants can be between the age of 18 to 65 years. The salaried should have work experience of at least a year; self-employed must produce the income tax return for the past year. Another important parameter is the credit score. Though bike loans are relatively flexible concerning credit scores, it is advisable to maintain a credit score of 700 or more for easy processing.

Documentary requirements

The documentation process for two-wheeler loans is fairly simple and straightforward. However, it is advisable to check the documentary requirements beforehand and keep them ready while filling the loan application. Most lenders process the loan applications based on the following documents:

  • Proof of identity and age (PAN card, Aadhaar Card, Driving License, Passport, etc)
  • Proof of address (rental agreement, Passport, electricity bill, telephone bill, etc)
  • Recent passport-sized photographs
  • Duly filled loan application
  • For Salaried individuals: Form 16 and salary slips for the past three months
  • For self-employed individuals: Copy of the latest income tax return

Loan amount and EMI

The next step is to calculate the amount that you would like to borrow. Assess your financial situation before applying for a loan. Experts suggest that you must borrow only that amount which you can pay easily without compromising your monthly budget. Over-borrowing can lead to defaulting of the payments and consequently affect your credit score negatively.

Next, check whether you are eligible to borrow the said amount using a bike loan calculator. Compute the monthly instalments for this amount, using the EMI calculators that are available on most financial websites. The last step is to evaluate your financial situation considering the EMI, along with your regular monthly expenses and any other liabilities.

Scope out the market

Many finance companies offer attractive deals on two-wheeler loans. Sometimes, the automobile companies also come up with attractive discounts on vehicles purchased on EMI. If you are not in a hurry to buy the vehicle, it is advisable to wait for festive discounts. During the festive season, the dealerships come up with additional offers such as free insurance, free accessories and zero processing fee. Some lenders even offer zero down payment loans on selected models. Therefore, before choosing a lender you must study the markets first. Try to take advantage of as many offers and deals that you can.

Interest rates and other conditions

Once you have narrowed down the list of lenders, compare the interest rates quoted by them. You must also read the terms and conditions associated with the loan such as foreclosure charges and processing fees. Reading the terms and conditions will help you navigate any hidden charges that may compromise your calculations.


The idea behind purchasing a two-wheeler can be an urge to avoid struggling in public transportation or it can merely be to fulfil a fantasy. Bike loans or two wheeler loans help individuals realise this dream. As compared to personal loans, two-wheelers loans offer better interest rates, flexible repayment tenures and easy processing. The loan documentation is minimal and hassle-free. To make two-wheeler loans even more appealing, the lenders have also begun instant digital approval of such loans. However, like any other loan, one must first analyse their financial situation and repayment capacity before applying for two-wheeler loans.


Author: Veronika

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