Top 5 Factors That Affect Your Bike Loan EMI

Bikes have emerged as the most popular form of personal transportation in India. With the rising prices of cars, they are a much more affordable option for commuters. Furthermore, they can easily move through traffic, allowing users to reach their destination much faster than on a four-wheeler. Thus, it helps one save both time and money. Let’s dive into the concept of a two-wheeler loan and understand the factors that affect it.


Two Wheeler Financing


A two-wheeler loan is a financial instrument that allows you to take a loan for a two-wheeler from a lender. Generally, 80% of the price of the bike is financed as a loan, while the rest must be paid in a down payment to the bike dealer. These loans are popular because the interest rates are very low, and come with easy, convenient repayment plans.

Thus, two-wheeler loans are a great choice for those who need a motorcycle and cannot afford it immediately. If you are planning to buy a bike and avail of a bike loan EMI to do so, there are many important factors you must know. You can also use a bike loan EMI calculator to calculate the cost of the EMI according to your requirements.


5 Factors That Affect Bike Loan EMI

  • Credit Score

Your Credit Score is one of the most important factors when it comes to taking a loan. It is a number assigned to you by credit rating agencies, which consider numerous facets including the number of loans you’ve taken, the loan amounts, whether you made timely payments or missed them and so on. The Score is out of 900, and anything above 700 is deemed a good score. The bike loan interest rates will depend on this score, and you will have a low interest rate if your rating is good.

Additional Read: Top 5 Ways To Improve Your Credit Score Fast
  • Loan Amount

The interest rate also depends on the total amount of the loan you are asking for. The higher the cost of your bike, the more the loan you will need. Thus, this also increased the interest rate, as the financial institution is taking a bigger risk in awarding you with a loan of a higher amount as it increases your chances of defaulting. This justifies their cost.

  • Loan Tenure

Your bike loan EMI price depends on your loan tenure. If you have a high monthly EMI price, the interest rate will be lower, as it reduces the risk of you defaulting. If you have a long tenure, and thus a lower EMI rate, your rate of interest will be much higher. This is a general rule followed in banking. You can use a bike loan EMI calculator to calculate the best option for you.

Additional Read: How To Choose Two Wheeler Loan Tenure Wisely
  • Dealership Location

Prices also depend on the dealership location. As you know, the price of the bike has small variations depending on the dealership location as each distributor has different costs and different local tax amounts. Thus, in order to get the best deal in the bike loan interest rates ensure you choose a dealership that gives a good price.

  • Secured Vs Unsecured Loan

A secured loan is one where you must pledge an asset to the bank as security or collateral. This reduces the rate of interest as there is less risk for the bank in giving you the loan.

Unsecured loans are loans where you do not pledge collateral, and thus have higher rates of interest to justify their risk. You must choose whichever option works best for you.




A bike will be very useful as a form of a daily commute, as it saves both time and money. Loans allow you to get one without it significantly affecting your monthly income.

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