Know The Bike Loan Interest Rate Offered By Banks & NBFCs In 2023

By DriveSpark Bureau

Updated: Thursday, January 19, 2023, 17:53 [IST]

Two-wheeler loans have become incredibly popular and attractive to customers. These loans are specifically designed for the purpose of purchasing a motorcycle. Similar to a personal loan, you borrow a certain amount and then make payments on the loan, with interest, over a specific period until the loan is fully repaid. The bike loan interest rate can vary depending on factors such as the lender, your credit score, and the terms of the loan.

Typically, the interest rate on a bike loan is higher than the interest rate on a car loan. However, it is lower than the interest rate on a credit card or unsecured personal loan. Furthermore, bike loans are usually for smaller amounts than car loans, and have shorter repayment periods. Banks, NBFCs and financing companies provide bike loans with a variety of repayment terms. Some lenders may also require a down payment - or collateral - to approve the loan.

However, you must meet certain two-wheeler loan eligibility criteria before applying for a two-wheeler loan. For instance, to get a bike loan, you typically have to provide proof of income and proof of residence, and have a good credit score. If you have a low credit score, you may still be able to get a bike loan, but the bike loan interest rate will likely be higher.

Banks vs. NBFCs - Interest rates

According to reports, around 75% of two-wheelers are bought 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 is imperative that you weigh their pros and cons. While banks are generally the safest options, the bike loan interest rates offered by them rely on various factors, such as RBI's policy rate changes and related market forces. However, 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 generous repayment terms. The bike loan interest rates can range from 6.85% to 29% per annum, depending on several aspects.

Two-wheeler loan eligibility criteria

The next thing you need to consider is the eligibility criteria to successfully apply for a two-wheeler loan. While different lending entities have different criteria, in general, you have to meet the basic eligibility criteria. 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 (salaried or self-employed)
Income: You should earn at least ₹15,000 per month
Credit score: You should have a respectable credit score (700 or above)

These factors also affect the bike loan interest rates. For instance, if you are in your 20s or 30s, you will get bike loans against nominal interest rates. However, the interest rates will be higher if you are nearing your retirement. Similarly, if you have a good credit score (750 or above), you will be considered a responsible borrower. Consequently, you can enjoy competitive bike loan interest rates.

Interest rates offered by Banks and NBFCs

The table below outlines the interest rates offered by some of the leading banks and NBFCs in the country in 2023.

Lending Institution	Interest Rate
State Bank of India (SBI)	17.30% to 19.05% per annum
HDFC Bank	14.50% per annum onwards
Punjab National Bank	10.55% per annum onwards
Union Bank of India	10.30% per annum onwards
Bajaj Auto Finance	11.20% per annum onwards
L&T Finance	7.99% per annum onwards
Mahindra Finance	6% per annum onwards

How can you get nominal interest rates?

Before applying for a two-wheeler loan, you can ensure that you get the most competitive interest rates by following these steps.

Repay your debt - It is crucial that you repay all of your existing debts and reduce your liabilities. This will have a positive impact on your credit score. You can wait until your credit score reaches 750 and then apply for the two-wheeler loan. This also reduces your debt-to-income (DTI) ratio, which should be below 40%.
Never miss any payments - It is also vital that you pay your credit card bills - and other EMIs on time.
Carefully consider the eligibility criteria - You should also carefully assess the two-wheeler loan eligibility criteria before applying for a bike loan. Certain lenders are more lenient with their terms and conditions than others. For instance, certain lending entities might not have a minimum credit score requirement, or have a low monthly income mandate. This allows you to get competitive bike loan interest rates even with a low credit score.
Talk to your existing bank - If you currently have a good relationship with your bank, talk to them and check if they can offer attractive bike loan interest rates and better repayment terms.

You can also use an online bike EMI calculator to find the best repayment terms according to 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.

Final thoughts

Before opting for a bank or NBFC, you must consider several factors. The most important among them is the bike loan interest rate, followed by the two-wheeler loan eligibility criteria, and the loan repayment terms. We have provided the interest rates offered by different banks and NBFCs, and you can compare the interest rates and choose a lending institution. To streamline the entire process, you can also visit Bajaj Markets and apply for a two-wheeler loan in a few simple steps.