India with its narrow lanes and densely populated areas is home to one of the highest number of two-wheelers in the world. For many Indians, buying a two-wheeler of their own is a dream. For some, a two-wheeler adds more convenience to their lives, which sometimes a car fails to do. And this is one of the main reasons that has led to a rise in two-wheeler loans in India. Yes, along with car loans, you can now also take a loan to buy your dream bike! Owing to this ever-increasing demand, various banks have begun to offer loans for bike and scooter purchases.

If you’re considering purchasing a two-wheeler this year and are wondering about interest rates, bank choices, and other legalities, then worry not. Because in this article, we at BikeLoanEMI will be covering all of that plus more. Let’s begin?

What Is Interest Rate?

The interest rate on a loan is essentially the amount that is charged to the loan borrower in addition to the principal loan amount. The interest rate is essential when borrowing a loan as your EMIs or Equated Monthly Installments are directly affected by it. Interest rates vary as per several factors. The most common determinant, however, is the value of your purchase. The higher the value of your two-wheeler, the higher will your rate of interest be.

Also see: How To Get A Two-Wheeler Loan

Interest Rates By Top Banks

Two-wheelers, today, are practically used by people belonging to all strata of society. You cannot deny that it is the preferred and quickest mode of transport. Thus with low-interest rate loans, banks have made buying a two-wheeler affordable and convenient for most Indians.

Let’s take a look at the two-wheeler interest rates charged by top banks in India in the year 2021:

BankInterest RateProcessing FeesMax Repayment Period
State Bank of India11.35% – 17.15% p.a.1.25% – 2.00% of loan amount3 Years
HDFC Bank12.90% – 24.00% p.a.2% of loan amount.
1% for HDFC Account Holders
4 years
Punjab National Bank11.10% – 13.60% p.a.0.5% of loan amount5 years
Bank of Baroda13.65% p.a.2%, (Minimum Rs.250/-)5 years
Bajaj Finserv13% – 18% p.a.up to 4%Upto 3 years

Why Do Interest Rates Matter?

As mentioned above, your interest rates determine your monthly EMI payments. When considering buying a bike on loan, always compare the interest rates offered by all banks and institutions. Use our online EMI calculator if you may. It will instantly calculate and show you the amount you have to pay monthly as per the interest rate, principal amount, and loan tenure. This exercise will enable you to get the best deal, resulting in the cheapest loan that suits your needs best.

Factors That Affect Interest Rates

Interest rates on loans are never fixed. Not only do they vary from bank to bank, but also from individual to individual. Let’s take a look at the various factors that affect your loan interest rate:

  1. Income – Although for bike and other two-wheeler loans, the income criteria are generally low, it does play a key role in determining interest rates. If you have a stable, high-income job, you are likely to be charged a low interest rate as your chances of defaulting are much lower.
  2. Place of Work – If you are employed and wcorking for a reputable, well-known organization, then that as well can influence and lower your interest rates. Stable incomes are essential when applying for a loan. And being employed with a reputed employer can be proof of the job stability that most loaners seek.
  3. Vehicle Model – Interest rates are also dependent on the category and type of two-wheelers you are purchasing. Needless to say, if you are borrowing money to buy a high-end bike model that is costlier and more luxurious, then your interest rates will also increase accordingly.

How Can You Lower Interest Rates?

Yes, lowering interest rates is very much possible, provided you have a couple of things to back your credit profile. What are these things, and how can you lower your loan interest rate? Let’s find out:

  1. Borrow a loan from your existing bank – It’s advisable to take a loan from a bank you already have an account with. This comes in handy because it helps you leverage the already established relationship you have with your bank representatives. Moreover, you will find yourself in a better position to negotiate the interest rates with your bank in comparison to reaching out to a new bank for a loan.
  2. Maintain a good credit score – We have said this before, and we’ll say it once more. Your credit score is of supreme importance when applying for a loan. You can check your CIBIL score online before making your loan application. The score is determined based on your credit history and previous transactions with credit. Having a high score will give you negotiating power to lower your rate of interest.
  3. Debt to Income ratio – Knowing your debt to income ratio is basically finding out how much of your current income is going towards existing loan repayments and past debts. Naturally, if you already have a large amount of credit and debt to your name, getting a low-interest rate will be tough. Pay your debts and try to bring down this ratio as much as possible to get the interest rate in your favor.


Getting a two-wheeler of your choice today is far easier than it used to be before. For those who may not have the entire amount to pay in one go, a two-wheeler loan has definitely made things a lot more convenient for them. We hope this article has been beneficial and helped you navigate through the world of interest rates and bike loans. Here’s wishing you good luck with all the actual navigation that you’ll soon be experiencing on your new bike!

Also see: CIBIL Score for Bike Loan in India