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Things to consider while taking bike loan

3 Mins 04 Apr 2022 0 COMMENT


A bike or two-wheeler loan can be a prudent option to finance your dream bike. It may help you own your dream bike without worrying about the cost of the two-wheeler, as it allows you to repay the entire loan amount in equated monthly instalments (EMI) spanning over one or two or three years. But when applying for a bike loan, you need to consider several parameters, based on which you can choose the best-fitted two-wheeler loan for yourself.

Additional Read: Simple Tips to Get Your Two-Wheeler Loan Application

Here are a few things to consider when applying for a bike or two-wheeler loan:

Know your credit score

Credit scores today play a crucial role when applying for any loan. In India, bike or two-wheeler loans are generally unsecured loans. Hence, credit score has become critical in these types of loans as it indicates your creditworthiness. Measured on a scale of 900, 720 and above is a good credit score that can get you a quick and easy loan approval along with the opportunity to negotiate a better deal in terms of the interest rate. However, an unfavourable credit score may attract further scrutiny and higher interest rates and lead to loan rejection.

Check your eligibility

It is due diligence to estimate the eligibility for the loan. There are several free online tools to help you with that. By filling up some simple details such as age, whether salaried or self-employed, monthly income scale, type of residence, and so on, you can have a relative understanding of your eligibility in terms of total loan amount and the monthly EMI amounts. This knowledge can help you choose the best bike loan fitting your requirement. It would also help you avoid over-borrowing.

Understand the type of interest being charged

Generally, in India, the interest rate in retail loans can be broadly classified into two categories: fixed and floating rates of interest. In the floating rate of interest, the interest rate moves up and down based on other external factors such as the number of repayments done to date, prevailing market rate, and credit score, among others.

In a fixed rate of interest, the borrower and lender agree on a rate of interest when signing the loan documents. The interest rate remains the same through the tenure of the loan.

Additional Read: Can Students Apply for Two Wheeler Loans in India?

Know the tenure of your loan

When availing of the best bike loan, you should critically consider the repayment period. Generally, in India, bike or two-wheeler loans have a repayment period of 12 to 60 months. Depending on the loan tenure, the equated monthly instalment (EMI) amounts would vary. A higher repayment period means lower EMI, whereas a shorter repayment period means the opposite. But higher tenure also means you pay a higher interest, and on the contrary, lower tenure means you pay lower interest on the loan.

Have a well-throughout repayment plan

When availing of a bike loan, have a sound repayment plan. Before signing the loan document, discuss your repayment plan with the lender and discuss the different options available at your disposal in the event of any difficulty during the loan period.


Though a bike loan will ensure you finally own your dream bike, you should choose wisely after considering various parameters. Preferably you should opt for bike loans that will provide you with a flexible repayment option along with a grace period.

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