Two-wheelers are the best personal commute partners when navigating congested Indian roads, dealing with limited parking space and meeting the affordability mark. As per the latest forecasts, the Indian two-wheeler market is projected to cross the $12 billion mark by 2025. Additionally, the premium two-wheeler segment is slated to reach the $161 million mark by 2023, while the electric two-wheeler market is set to grow by 78% by 2030.
While this remarkable growth trajectory can be examined as a direct result of rising per capita earnings, easily available bike loan options also fuel this growth. With two-wheeler loan interest rates becoming more pocket-friendly, over 75% of Indians have opted for such bike financing options. If you are currently considering securing bike finance at an affordable rate, hereâ€™s a list of expert-approved steps to help you in this quest.
Step 1: Check Your Credit Score
Your credit score is a number that signifies your creditworthiness to a potential lender. Generally, two-wheeler loan interest rates tend to be lower for those with a credit score of 750 or more. Thus, before availing a bike loan opportunity, you should first check your credit score online. Most lenders offer free-of-cost credit score calculators that display the results in a matter of seconds. If your credit score is below the 750 mark, you should look at ways to improve it before applying for a two-wheeler loan.
Step 2: Review Your Debt-to-Income Ratio
Simply put, you should check how much of your current income is being used to meet existing credit liabilities. For instance, if you have an existing home loan, a sizable portion of your monthly earnings will likely go towards meeting this loanâ€™s EMI requirements. This will leave you with little funds for the new two-wheeler loan. Your lender will perceive this as a high debt-to-income ratio. Thus, it is prudent to clear all your existing loans and credit card debts before applying for a bike finance opportunity. This helps reduce your debt ratio and makes you eligible for lower two-wheeler loan interest rates.
Step 3: Ensure That You Have a Good Monthly Income
Most lenders have an income clause in their eligibility list. While most lenders place the base income cap at the â‚¹20,000-â‚¹25,000 mark, a high monthly income reassures lenders about your repayment capacity. Thus, the higher your monthly income figure, the lower your two-wheeler loan interest rate.
Step 4: Take a Loan From Your Existing Lender
In a drive to promote customer loyalty, banks and NBFCs often offer preferential bike finance options to their existing customers. Thus, before you go looking for the best interest rates in the market, it is prudent to first approach your existing lender. If you have a good relationship with your lender, you can reap its benefits by scoring affordable two-wheeler loan interest rates.
Step 5: Opt for a Longer Repayment Tenure
Most bike financing plans allow you to pick a repayment tenure that fits your needs. While picking a shorter repayment duration cuts down on the payable total interest value, doing so also drives up the interest rate. Alternatively, picking a longer repayment tenure allows you to pace your payments over a longer duration and enjoy a lower interest rate.
Step 6: Make a Higher Down Payment
While most banks and NBFCs now offer 100% bike financing options, opting for such loan plans will inevitably hike your interest burden. This is because the borrowed principal sum determines your payable interest rate. In other words, if you borrow a sizable amount, you will have to shoulder higher interest rates. You can avoid this by opting to make a higher down payment for the bike. This will reduce the total sum borrowed, thereby bringing down your two-wheeler loan interest rate.
Step 7: Opt for a Variable Rate of Interest
Most lenders today offer both fixed and variable interest rates with their bike finance plans. While a fixed rate protects you against market-linked changes, these rates tend to be higher than variable or floating rates. Generally, variable interest rates tend to be 1-2% lower than fixed rates. However, since variable two-wheeler loan interest rates change each time the RBI changes the repo rate, a certain risk element remains attached to them. Nonetheless, even if the rates rise with market changes, you will only have to weather slightly higher rates for a short duration. These hiked rates might return to normal as soon as the market stabilises. Thus, if you're not a risk-averse borrower, opting for a variable rate can help you score attractive discounts on your two-wheeler loan interest rates.
Step 8: Use an EMI Calculator to Compare Interest Rates
Using an online EMI calculator is the easiest way to score the best two-wheeler interest rates in the market. Before opting for a bike finance plan by any lender, you can use this digital tool to compare two wheeler loan interest rates offered by leading banks and NBFCs. Doing so will help you determine your EMI burden based on the borrowed principal sum and the applicable interest rate. You can also input different combinations of loan tenures to pick one that offers you the lowest two-wheeler loan interest rates.
If you wish to bypass the hassle of going through the above-mentioned steps, you can simply opt for a bike finance plan from Bajaj Markets. Here, you can avail of two-wheeler loan interest rates starting from just 9.25% p.a., avail of pre-approved offers and enjoy flexible repayment tenures. Additionally, you can apply for such two-wheeler loans online with minimum documentation and get speedy approvals, avoiding the hassle of long queues and lengthy waiting periods.
Disclaimer: This article is published in association with Bajaj Finserv Markets and not created by TNM Editorial. Please do your own research before using any financial services and seek independent legal/financial advice if you are unsure.