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Tata Capital > Blog > Personal Use Loan > Difference Between Two-Wheeler Loan vs Personal Loan

Personal Use Loan

Difference Between Two-Wheeler Loan vs Personal Loan

Difference Between Two-Wheeler Loan vs Personal Loan

Are you planning to buy a bike but unsure which financing option is better - a personal loan or a two-wheeler loan? In India, various types of loans are available to cater to different needs, including home loans, auto loans, education loans, and more.

However, when it comes to purchasing a bike or a two-wheeler, the decision between a personal loan and a bike loan can be confusing.

In this article, we will explore the details of a personal loan vs a bike loan, and the features and benefits of each type of loan to help you make an informed choice.

Features of a Personal Loan

In the debate about two-wheeler loan vs personal loan, let us examine each of them one by one.

A personal loan is an unsecured short-term loan that can be availed from banks, NBFCs (Non-Banking Financial Companies), or online fintech lenders. Unlike other types of loans such as home loans or education loans, personal loans do not require any collateral or security. This makes them relatively easier to avail compared to secured loans. However, due to their unsecured nature, personal loans usually come with higher interest rates.

Here are some key features of personal loans:

  1. Versatility: Personal loans can be used for any legal purpose. Whether you want to purchase a bike, fund your wedding expenses, renovate your home, or pay off medical bills, you have the flexibility to use the funds as per your requirements.
  2. Loan Amount: The loan amount for personal loans varies based on factors such as your income, credit score, repayment capacity, and lender's policies. Generally, you can avail anywhere between Rs 5,000 to Rs 25 lakhs with a personal loan.
  3. No Collateral: As mentioned earlier, personal loans are unsecured, which means you don't need to provide any collateral or security against the loan amount. This makes it a viable option for individuals who do not own any assets to pledge as collateral.
  4. Interest Rate: The interest rate on personal loans varies from lender to lender and is based on factors such as your credit score, income stability, and repayment capacity. Typically, interest rates for personal loans start at around 10% and can go up to 24%.
  5. Tenure: Personal loans generally come with flexible repayment tenure options ranging from 1 year to 5 years. You can choose a repayment plan based on your financial capabilities.

Features of a Two-Wheeler Loan

A two-wheeler loan, also known as a bike loan, is a secured loan that is specifically designed to finance the purchase of a two-wheeler vehicle such as a bike or scooter. Unlike personal loans, two-wheeler loans require you to provide collateral in the form of the vehicle itself.

Here are some key features of two-wheeler loans:

  1. Loan Amount: The loan amount for two-wheeler loans is typically restricted to the price of the bike you wish to purchase. Lenders usually offer up to 80-90% of the on-road price of the vehicle as a loan amount.
  2. Down Payment/Collateral: While availing a two-wheeler loan, you may be required to make a down payment which is usually around 10-20% of the on-road cost of the vehicle. Additionally, the bike itself will be considered as collateral until the loan is fully repaid.
  3. Interest Rate: Two-wheeler loans generally come with lower interest rates compared to personal loans due to their secured nature. Generally, the interest rates can start from as low as 9.55% per annum.
  4. Tenure: The tenure for two-wheeler loans is typically longer compared to personal loans. While personal loans usually have a repayment tenure of up to 5 years, two-wheeler loans can have extended tenures of up to 7 years.
  5. Eligibility Criteria: The eligibility criteria for two-wheeler loans are generally more stringent compared to personal loans. Lenders consider factors such as your income, employment stability, credit score, and repayment capacity while determining your eligibility for a two-wheeler loan.

    If you require funds for multiple purposes or if you need a loan with minimal documentation, a personal loan would be a better option. On the other hand, if you are comfortable providing collateral (the bike itself) and prefer a longer repayment tenure, a two-wheeler loan may suit your needs better.

Example 1: Emergency Bike Purchase

Let's consider an example scenario:

Rahul needs to urgently purchase a bike for his daily commute to work. He doesn't have any collateral to offer for a secured loan and wants a quick loan approval process. In this case, Rahul can opt for a personal loan as it provides him with the flexibility of using the funds for purchasing the bike without any collateral requirements.

Example 2: Long-Term Bike Ownership

Now let's consider another scenario:

Neha is planning to buy her dream bike which requires a substantial amount of money. She is comfortable providing collateral and prefers lower monthly EMIs spanning over a longer tenure. In this case, Neha can opt for a two-wheeler loan as it allows her to finance the entire cost of the bike while enjoying lower interest rates and extended repayment tenure.


While discussing the motorcycle loan vs personal loan, we have seen that both personal loans and two-wheeler loans have their unique features and benefits. While personal loans offer versatility and flexibility in terms of usage, two-wheeler loans provide lower interest rates and extended repayment tenures. The decision between the two depends on your specific financial situation, requirements, and preferences.

Before making a decision, carefully evaluate your needs, and consider the eligibility criteria, interest rates offered by various lenders, repayment options, and other terms and conditions.

If you're looking for a personal loan, you can explore Tata Capital's loan offerings. On the other hand, if you're considering two-wheeler finance, Tata Capital also provides competitive financing options For more information and immediate assistance download the Tata Capital app now and enjoy the best offers for your specific requirements.

You can use online tools like the Tata Capital Personal Loan EMI Calculator or Two-Wheeler Loan EMI Calculator to estimate EMIs and plan your finances accordingly.

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