How to Get a Two Wheeler Loan at Best Interest Rates?

The best way to commute on busy roads is on a bike. Its smaller size makes it easy for the drivers to cut their way out of heavy traffic which car owners lose out on. The only thing that might dissuade a person from buying a bike is its price. There are good bikes belonging to every price range as per the needs and budget of a person. Even the bikes belonging to a lower price range are expensive enough to put financial pressure on a person if he or she decides to buy it in cash.

In a long-term financial sense, it is not a sound decision as a substantial chunk of a person's savings gets wiped out once. An emergency might be enough to put a person under financial burden in that case. The interest rate that is to be paid when a bike loan is taken can be kept nominal to enable the buyer to apply for a bike loan to finance the purchase.

The factors affecting loan interest rates are:

1. The amount of loan taken

The lower the amount of loan taken, the lower will be the interest paid. Keeping other factors constant, if one does not want to pay a large amount in terms of interest, that person can finance the bike partly with cash and partly by loan to facilitate low two wheeler loan interest rate. The amount can be accordingly decided by the loan applicant.

2. Credit rating of the applicant

Credit rating is a score that indicates the creditworthiness of a loan applicant. On the basis of this score primarily, a person's loan is approved. If the credit rating for a person is low, that person will have to pay interest at a higher rate. So it is better to maintain a good credit rating for lower interest loans on two wheelers. A bike loan EMI calculator can be used to compute the monthly payment by each borrower and decide if it is possible to be paid on time.

3. The term of the loan

This includes the time during which the principal amount as well as the interest is paid back to the lender. A longer term or duration for the loan attracts a lower rate of interest. The only downside to it is that liability of the loan has to be carried for a longer period of time. The borrower must decide the term and interest rate that will work out the best personally.

Additional Read: How to Apply for a Bike Loan?

4. The borrower's annual income

The interest rate is usually based on the possibility of the borrower to pay it back in time. The more confidence the lender has on the borrower, the lower will be the two wheeler loan interest rate. This becomes evident that a greater annual income attracts a lower rate of interest.

5. Credit history of the borrower

Chances are that if your credit history is not good enough to impress the lenders, they will increase the rate of interest to cover their risk of extending a loan to that person. Any default of payment in the borrower's credit history shows uncertainty of that person paying the loan back. A clean credit history with timely payment of dues is likely to attract a lesser rate of interest.

6. Bank statement

A strong financial position is indicated by a stable bank balance. This financial stability helps lower the rate of interest that is levied on the borrower's two wheeler loan. A bike loan EMI calculator can be used accordingly to reach at an interest rate that both parties can comfortably agree on.

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