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Key Benefits of Opting For a Two-Wheeler Loan to Buy Your Dream Bike

A two-wheeler financing is a simple and convenient way to finance the motorcycle of your preference. If you really are working or self-employed, you could secure a two-wheeler offer to finance a scooter or motorbike. It enables you to afford a two-wheeler without needing to pay the complete price upfront. One should settle both the interest and principal on the loan in equal repayments, or EMIs.

Banks determine your loan eligibility depending on the price of said two-wheeler as well as the EMI you could afford. With each monthly repayment, the interest component of your EMI decreases.

The Indian two-wheeler loan market is expected to grow from $7.2 billion in 2020 to $12.3 billion in 2025, according to a report. It is an 11 percent compound annual growth rate over a five-year period. Loans for two-wheelers are common among Generation Z, particularly those born after 1995. According to the latest estimates, 50% of two-wheelers are loaned, up from 30% in the preceding decade. It anticipates an increase in the number of individuals riding bicycles as a result of the two-wheeler loan programme.

Eligibility for a loan on a two-wheeler

When applying for a two-wheeler loan, banks/NBFCs need that you be at least 21 years old. You must repay the loan before reaching the age of 60. If you are self-employed, lenders will permit you to return the debt before the age of 65.

Prior to applying for the loan, you must have held stable work for at least one year. It would be advantageous if you have lived in your current residence for at least one year. If you are self-employed, you must have been in the same area of business for at least one year.

Before applying for the loan, ensure that your CIBIL score is between 700 and 750. Your bank may set a minimum annual income of between Rs 72,000 and Rs 1.5 lakh. It varies significantly between banks and financial entities.

Loan documents for a two-wheeler

Banking institutions require specific documentation to process loan applications. As identification, you must produce a self-attested copy of your PAN Card. A self-attested copy of a passport or voter identification card is acceptable as evidence of address.

Maintain three months’ worth of pay stubs and bank statements. Your bank will request a copy of your most recent income tax return (ITR). Keep a pair of passport-size photos on hand and don’t forget to complete the request form.

If you are self-employed, banks may require additional documentation. Submit your business’s statement of financial position and losses statement. You must produce your most recent two years’ income tax return. Banks conduct a credit check on your firm prior to approving the two-wheeler loan.

Features of a two-wheeler loan

  • Numerous institutions cover up to 90% to 95percent of the total value of said two-wheeler. You will need to arrange for the remainder of the funds and complete the down payment.
  • Banks charge an annual interest rate of between 9.5 percent and 17 percent.
  • You have five years to repay the two-wheeler loan.
  • Before applying for a two-wheeler loan, verify the processing fees. It fluctuates between 0.25 percent and 5% of the loan amount. Banks determine the minimal and max fee levels.
  • If you are a current customer of the bank, you can apply for pre-approved two-wheeler loans.
  • Check to see if your lender offers unique EMI repayment plans.
  • Female consumers receive an astounding 0.5 percent discount from banks.
  • The institution could have an established relationship with a dealership.
  • With minimal documents, you could qualify for a two-wheeler credit instantly.

Steps involved in obtaining a two-wheeler loan

  1. Select the bank or non-bank financial company (NBFC) from whom you wish to obtain a two-wheeler loan. Consider an online alternative that includes a visit from a bank executive.
  2. Verify your suitability for the two-wheeler loan before actually applying. Prior to visiting a lender, familiarise yourself with the paperwork.
  3. Using an internet two-wheeler loan estimator, compute the monthly instalments on the two-wheeler loan. It provides you with an estimate of the EMI you’re inclined to pay. Your EMI is determined by the amount borrowed, rate of interest, and term of the loan.
  4. Submit all required documentation, including proof of identity, address evidence, and bank statements. The bank verifies that it’s in place and determines whether you qualify for the loan. Your bank account is credited with the loan amount.

Tips for obtaining the best two-wheeler loan

  • To obtain a reduced interest rate, approach the institution and when you have an account.
  • Acquire a two-wheeler amid the holiday season. Banks may also provide additional benefits such as complimentary coverage or no processing fees.
  • If you have an excellent credit score, you can negotiate reduced interest rates with banks.
  • Calculate your ability to repay a loan on a two-wheeler using a loan EMI calculator. Don’t really over borrow; else, you will have difficulty repaying the debt.
  • Before authorising the two-wheeler loan, banks verify that you are current on your other debts. Prior to applying for the loan, pay off any personal loans or credit card debt.
  • Choose a repayment schedule with adaptable EMIs to ensure that you would never miss payments. Make a sizable deposit in exchange for a small repayment amount and timing.
  • Prior to accepting the loan agreement, familiarise yourself with the intricate clauses.
  • Consider a longer loan term to avoid repayment difficulties.
  • When purchasing a motorcycle, keep a keen eye on insurance and registration fees.
  • Check with your bank to see whether you may pay in advance the credit without incurring further fees. Consider charges, late payment penalties, and so forth.

Benefits of opting for a two wheeler loan:

  • Financial institutions could finance the entire cost of the on-road pricing of your two-wheeler.
  • Rather than spending cash on a bike, save it for an emergency. Take out a two-wheeler loan and pay it back in convenient installments over a period of time.
  • You can improve your credit score by repaying the loan on time. It enables you to obtain better interest rates on additional loans.
  • Banks will grant you a two-wheeler loan regardless of your income level.
  • In comparison to a personal loan, the bank imposes a lower interest rate.
  • When you secure a loan for the scooter from such a financial institution, you receive a tax benefit. It is a tax break on interests of up to Rs 1.5 lakh per year per Section 80EEB of the Income Tax Act. Between April 1, 2019 and March 31, 2023, the institution would execute your loan.


In the Covid-19 outbreak scenario and even post Covid-19, the preferences for personal vehicles are going to be high. In such a case, opting for a car may not be a viable option for many. However, a two wheeler is the type that may fit under the radar of many individuals. To make it easier for everyone to have their own private vehicle amid Covid-19 scenario, there are a lot of two vehicle financing offers being offered by the bank.

Red Note: 30 September 2022

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