What are the benefits of a two wheeler loan?

A two wheeler loan has the following benefits– Avoiding public transport amidst COVID-19 – Avoiding public transport amidst COVID-19 – Abstain from taking overcrowded public transportation and travel safely with a personal two wheeler.Easy way to finance your dream ride – In a few simple steps, you can bring home your dream two wheeler at affordable interest rates.Meeting all personal and business commuting needs – You need not depend on anyone else for your commuting requirements, especially in times of emergencies.Keeping aside cash for emergencies – Keep your savings undisturbed for emergency situations as you can repay the loan in easy monthly instalments. With Tata Capital, you get the best bike interest rates in the industry. Our new bike loan interest rates start at just 11.5%.Tax claims and deductions - Enjoy tax benefits on the interest payable of the vehicle if you’re taking a Two-wheeler loan for electric vehicle.

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Two-wheeler Loan Interest Rates

Most consumers approach loans carefully, and they would be right in doing so because of how the two-wheeler loan process is structured. Because loans can have different interest rates, borrowers try to see how they can get reduced interest rates as much as possible. Fortunately, Tata Capital offers highly competitive rates that happen to be the best in the industry.

So you might wonder how certain interest rates are higher or lower than others. That is what we will be covering in depth. We'll be exploring the different types of interest rates and what it means for your loans.

What is the Two Wheeler Vehicle Loan Interest Rate?

Two-wheeler vehicle loan interest rate is the rate at which you'll have to pay interest on your two-wheeler loan principal for a fixed tenure. It differs from lender to lender.

Type of Fee	Applicable Charges
Processing Fee	Up to 4% + GST on total loan amount
Additional Processing fee/Admin fee	Up to ₹ 2500 wherever applicable
Penal Interest/Additional Interest	3% on overdue amount per month*
Post Disbursement Documentation Charge	Up to ₹ 650 + GST

Tata Capital offers the lowest two wheeler loan interest rate in the industry, starting at just 11.5%.

Types of interest rates

For loans, there are usually two different types of interest rates that are applied. They are fixed interest rates and floating interest rates. Let's look at them in-depth now.

Fixed interest rates

Fixed interest rates, as the name suggests, do not change over the tenure of the loan. This means that you pay only a fixed interest rate throughout the entire duration. For example, let's say you take a bike loan for Rs. 2 lakhs for five years at 7%. This means you'll only pay interest at a rate of 7% till the end of the loan tenure.

Pros of fixed interest rates

These interest rates never change, so you can always expect to pay the same rates until the end of the tenure and plan your finances better.
This can be advantageous in an unstable market condition, especially when money is important to save

Cons of fixed interest rates

Although they are stable, they can be higher than floating interest rates
You can lose money indirectly as interest rates would come down for floating interest rates in good market conditions

Floating interest rates

These are interest rates that change according to the conditions of the market. So this can be both advantageous and disadvantageous at the same time. For example, if the market conditions are good, then you might find yourself paying less than what you agreed. However, if the market conditions are bad, then you will end up paying more than the agreed amount, which can become challenging.

All in all, it's best to consider several different factors before you decide to go with a particular interest rate. So how do you decide which interest rates to pick? Let's go over some advantages and disadvantages to help you decide.

Pros of floating interest rates

Cheaper than fixed interest rates and can be attractive
It can be advantageous if the loan is for a longer tenure during favourable market conditions, as you can save money

Cons of floating interest rates

It can be unstable as interest rates can keep changing every now and then
There is a likelihood that you might lose money if unfavourable market conditions persist

Miscellaneous charges

PDC Charges

₹ 850

Bounce Charges

₹ 450 + GST

Cancellation Charges

2% of loan amount or ₹5,750 whichever is higher

Instrument Swap Charges

₹ 550 + GST

Foreclosure Charges

5% of the principal outstanding at the time of foreclosure + GST

Mandate Rejection Service Charge

₹ 450 + GST Charges will be applicable on your EMI Due date in case the account does not have an Active mandate after the exhaustion of the given post-dated cheques. This charge would be applied every month until there is an Active Mandate linked to the account.

Broken Period Bike Loan Interest

At Actuals

Repossession Charges

₹ 8,000

Statement of Accounts

₹ 300

Foreclosure Report

₹ 550

Duplicate NOC

₹ 300

Post Disbursement Documentation Charge

Up to ₹ 650 + GST

Stamp Duty Charges

For loan amounts up to ₹ 85,000 – ₹ 250
For loan amounts above ₹ 85,000 – As per state

Disclaimer:

The rates/charges indicated above are subject to revision at Tata Capital’s discretion from time to time.
For the definitions of the above charges, please refer to the Master Terms & Conditions sheet
Soft copies of documents mentioned in the table above will be provided free of cost. For hard copies, please refer to the above table for the applicable fees & charges.

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Tips to Lower Bike Loan Interest Rates

Before you apply for a loan, make sure you get the best deal on the interest rate. Follow these simple tips to get the lowest bike loan interest rate-

Improve your credit score

Your credit score has a major role when it comes to determining your interest rate. So, look at ways to improve it before you apply to get the lowest bike loan interest rate.

Improve your Current Debt Status
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Check your debt-to-income ratio. To bring down this ratio, repay your existing loan. The lower the ratio, the better your chances are of getting good interest rates.

Negotiate with your Lender

Sometimes, negotiating with your lender foe a low interest bike loan can help, especially when you don’t fulfill all the eligibility criteria. For example, if you don’t have sufficient income but are expecting a pay raise in the future, you can offer proof to back this and get affordable interest rates.

Turn to your existing lender for the best deal

If you already have a good relationship with a lender, you can get better two wheeler loan interest rates.

Things to Consider Other Than Interest Rates

While availing a loan for two wheeler, interest rate is not the only charge you need to pay. There are many other factors that you must consider before you apply for a loan. They include-

Processing Fee

It is a one-time charge that you need to pay the lender for processing your loan application. A high processing fee will increase your overall loan costs. So, make sure you choose a lender that offers you the lowest two wheeler loan interest rate along with a reasonable processing fee.

Eligibility Criteria

 Some lenders have stricter eligibility criteria than others. Choose a lender whose criteria you can easily fulfil to get your low interest bike loan without any hassles.

Prepayment Charges

Prepaying your loan can help you save money on two wheeler loan interest costs. But, many lenders charge a fee if you want to prepay or foreclose your loan. So, before you apply for a loan, compare these charges for different lenders.

Other Charges

Make sure to read the loan offer document carefully and find out every other cost there is before finalizing the offer. This will not only help you get a lower two wheeler finance interest rate but will also avoid any confusions later.

Disbursal Time

This is the time the lender takes to give you the money from the time you apply for it. Besides looking for the best bike finance interest rate, find out how long different lenders take to sanction and disburse your loan.

Discounts and special offers

 Look out for seasonal discounts or special bike loan interest rates and loan conditions offered by different lenders before making a decision. Many lenders give customers special offers during festival seasons. These offers can help you get a low bike loan interest rate, bike loan terms that are preferential, and better repayment options. 

Tax claims and deductions

Enjoy tax benefits on the interest payable of the vehicle if you’re taking a Two-wheeler loan for electric vehicle.

Factors that Affect Two-Wheeler Loan Interest Rate

Before you take on a two-wheeler loan, it can help to know what factors influence it so you can make a more informed decision. We dive into each of these factors so you can get a good overview of the loan's working.

Credit scores

The higher the credit score, the better the chances of you availing of a loan easily. Also, the lower the scores, it gets more difficult to avail of a loan. Fortunately, you can still get a loan with a low credit score, but your interest rates might be high.

So, it is always recommended to keep your credit scores high. This gives trust to the lender and can help you in future situations, too, when you need loans.

Income and income source

Generally, the higher the income, there are better the chances of availing of better interest rates because of higher affordability. However, you can still avail of a loan if you meet the minimum income requirement as set by the lender.
Your income source is also another factor that lenders will consider. If you are a salaried individual, you again have better chances of getting a loan easily.

Place of residence

If you live in a Tier-1 city, you can expect your interest rates to be high. While on the other hand, if you live in a Tier-2 city, your interest rates will be relatively lower.

Debt-to-income ratio

The better your debt-to-income ratio, the higher your chances of getting good interest rates.

It is calculated by taking all of your debt payments divided by your income. So, for example, if you have total monthly expenses amounting to Rs. 10000 and Rs. 5000, and your monthly income is Rs. 30000, your ratio will be 50%. In this case, you can improve your ratio by either cutting down the expenses or increasing your income levels.

Age

If a student who is 18 years old wants to avail of a loan, it will be challenging as they might not have a steady income source. And if a person close to their retirement age plans on taking a loan, it can be hard for them, too, as they won't have a steady source of income.

So, for these reasons, people who fall in between the age limits have better chances. Tata Capital's age eligibility criteria are for people between the ages of 18 and 60.

Loan tenure

If you choose a longer tenure, the rate of interest you will get will be much lower, but your overall interest paid will be high. On the other hand, if you choose a shorter tenure, the rate of interest will be high, but the overall interest to be paid will be low.

So, to make the best choice, evaluate both your long-term and short-term goals and see which one makes more financial sense. For example, if you plan on finishing the loan at any cost as soon as possible, then you can choose a smaller tenure at a higher rate of interest.

Detailed FAQs

To get a two wheeler loan at the lowest interest rate, follow these simple steps–

Check your two wheeler loan eligibility and submit the application form online for a quick and hassle-free procedure.

Visit the dealership showroom and select a bike or two wheeler of your choice.

Submit the required two wheeler loan documents.

We will verify your documents and credit report for loan approval.

Post-verification, if there are no discrepancies, we will sanction your loan and disburse the amount to your dealer. 

A two wheeler loan has the following benefits–

Avoiding public transport amidst COVID-19 – Avoiding public transport amidst COVID-19 – Abstain from taking overcrowded public transportation and travel safely with a personal two wheeler.
Easy way to finance your dream ride – In a few simple steps, you can bring home your dream two wheeler at affordable interest rates.
Meeting all personal and business commuting needs – You need not depend on anyone else for your commuting requirements, especially in times of emergencies.
Keeping aside cash for emergencies – Keep your savings undisturbed for emergency situations as you can repay the loan in easy monthly instalments. With Tata Capital, you get the best bike interest rates in the industry. Our new bike loan interest rates start at just 11.5%.
Tax claims and deductions - Enjoy tax benefits on the interest payable of the vehicle if you’re taking a Two-wheeler loan for electric vehicle.

With Tata Capital, you can get a bike finance for a maximum value of Rs. 2.85 lakhs. Depending upon your two wheeler loan eligibility, you can choose from a wide principal bracket (Rs. 25k to Rs. 2.85 lakhs). Moreover, our bike EMI interest rates start at just 10.99%. You can also calculate your bike loan EMI in advance using our two wheeler loan EMI calculator.

You can avail two wheeler loan ranging from 6 months to 60 months.

No, you do not need to pledge any additional asset as collateral when you avail of bike finance from Tata Capital. The vehicle you purchase will itself act as the security for your two wheeler loan.

Yes, you can avail a zero down payment two wheeler loan with Tata Capital. This means you don't have to make any down payment or pay any upfront costs. Your bike loan will cover 100% of your desired bike’s value up to ₹ 2.85 lakhs. Moreover, you can avail of this loan at affordable 2 wheeler loan interest rates.

Two wheeler loan interest rate refers to the rate at which you'll have to pay interest on your two wheeler loan principal for a fixed tenure. Tata Capital offers the best interest rates in the industry. Our two wheeler loan rate starts at just 10.99% flat rate.

Besides the 2 wheeler loan interest rate, you'll also have to pay a processing fee. Processing fee of a two wheeler loan is the fee charged for the processing of your loan application. This one-time fee is non-refundable even if we reject your loan application. Tata Capital charges a processing fee which is upto 4% + GST on the loan principal amount.

Since the interest rate is expressed as a percentage per annum, the following formula is used to calculate two wheeler loan interest - (Bike Loan Interest Rate/Number of Payments) x Loan Principal = Interest.

Let us understand this with the help of an example – For a loan principal of Rs. 2 lakhs taken at a bike loan interest rate of 12% for a period of 12 months or one year, the bike loan interest rate can be calculated as – (0.12/12) x 2,00,000 = Rs. 2,000.

Besides two wheeler loan interest rate, you also have to pay other charges like foreclosure charges. These are the charges you need to pay if you want to close your loan before the completion of the tenure. You will have to pay the relevant foreclosure charges along with the payment of the outstanding principal. Tata Capital levies foreclosure charges equivalent to 5% of the principal outstanding at the time of foreclosure of two wheeler loan + applicable GST.

Yes, the 2 wheeler loan interest rate is eligible for tax deductions to a maximum of Rs. 1.5 lakhs in a financial year as per Section 80 C of the Income Tax Act. You can only claim the deduction if you purchase the vehicle for business purposes. This is a big relief for self-employed individuals from high two wheeler loan interest rates. You cannot avail tax deductions if you purchase the vehicle for personal use.

No, the processing fees for two wheeler loan is not refundable. This is because we use the money you pay as processing fees towards the legal and technical action involved in the processing of your loan application. Hence, it is non-refundable even if your application is rejected.

A1. When a loan’s payable bike interest rate remains fixed throughout the tenure and does not decrease even as you pay instalments, it is a flat interest rate. The IRR (internal rate of return) measures an investment’s annual growth without factoring in external elements like inflation, risk-free rate, or capital cost. It helps determine the profitability of your

investments.

A2. The two-wheeler loan will incur the following additional charges:

1. 2 wheeler loan processing fee

2. Additional processing/admin fee

3. Post-disbursement documentation charge

4. Miscellaneous charges

A3. Yes, the credit score plays a significant role in determining the interest rate for a

two-wheeler loan. Rates of interest will be low if you improve your credit score.

A4. Tata Capital offers competitive interest rates on bike loans. You can learn more about our current interest rates here. For more information about two-wheeler loans, click here.

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