Two-Wheeler Loan Interest Rates

July 18, 2023


Owning a two-wheeler has become a necessity for many individuals, providing a convenient and cost-effective mode of transportation. However, the financial aspect of purchasing a two-wheeler can often pose a significant challenge. This is where two-wheeler loans come into play, offering a viable solution for individuals looking to finance their dream ride when they are not able to afford a car.

In this article, we will talk about two-wheeler loan interest rates, their significance, how they are calculated, and the key factors lenders should consider before determining these rates. Whether you are a first-time buyer or someone looking to upgrade their current two-wheeler, having a comprehensive understanding of interest rates is a must to make informed financial decisions.

Best Two-Wheeler Loan with Interest Rates

TWL Bank Interest Rate Tenure Processing Fee
ICICI Bank 9.00% p.a. or above 48 Months or above Up to 4.75% of the loan amount + GST
IDFC First Bank 9.99% p.a. Or above 6 Months to 48 Months 5% of the loan amount
Axis Bank 11.00% p.a. 0r above 12 Months to 38 Months 2.5% of the loan amount
Bank of India 11.00% p.a. or above Up to 5 Years Contact the bank
Punjab National Bank 11.15% p.a. or above 24 Months to 60 Months 0.5% of the loan amount subject to Rs.500 to Rs.1,000
Canara Bank 11.35% p.a. or above 12 Months to 48 Months Nil
Union Bank of India 12.20% p.a. or above Up to 3 Years Contact the bank
Bank of Baroda 9.40% p.a. or above Up to 60 Months 2% of the loan amount
Karnataka Bank 14.23 p.a. or above Up to 5 Years Contact the bank
HDFC Bank 14.50% p.a. or above 12 Months to 48 Months 2.5% of the loan amount
State Bank of India 17.75% -19.50% p.a. Up to 60 Months 2.00% of the loan amount + GST (minimum of Rs.1,000)
UCO Bank Floating rate + 4.80% Up to 4 Years 1% of the loan amount (minimum of Rs.500)
Indian Overseas Bank 12.55% p.a. or above 72 Months Contact the bank
Jammu and Kashmir Bank Fixed: RLLR + 2.00%

Floating: RLLR + 1.50%

Up to 60 Months 1% of the loan amount (minimum of Rs.500)
Karur Vysya Bank 10.80% p.a. – 17.30% p.a. 5 Years 1% of the loan amount (minimum of Rs.1,000)
Tata Capital 10.75% p.a. or above 6 Months to 60 Months 3.10% of the loan amount
Bajaj Auto Finance 6.2% – 13.8% p.a. Up to 60 Months 1% or more of the loan amount
Muthoot Capital 0.99% p.a. or above Up to 48 Months 1% to 4% of the loan amount
Hero Fincorp 10.65% p.a. Or above Up to 48 Months NA
Tamilnad Mercantile Bank 14.95% p.a. Up to 35 Months 1% of the loan amount

Tips to Avail Two Wheeler Loan at Low-Interest Rate

Owning a two-wheeler can significantly improve your daily commute and offer convenience in navigating through crowded city streets. However, purchasing a two-wheeler may require financial assistance in the form of a loan. When availing of a two-wheeler loan in India, it is important to consider the interest rate to ensure affordability.

Furthermore, in the list given below, we will discuss some valuable tips to help you avail of a two-wheeler loan at a low-interest rate in India:

Maintain a Good Credit Score

Your credit score plays a vital role in determining the interest rate offered by lenders. A high credit score indicates your creditworthiness and ability to repay the loan.

Compare Lenders

To avail of a two-wheeler loan at a low-interest rate, comparing loan offers from different lenders is essential. Banks, non-banking financial companies (NBFCs), and online lending platforms offer two-wheeler loans.

Opt for a Higher Down Payment

A larger down payment reduces the loan amount and subsequently lowers the interest charged. Lenders generally offer more attractive interest rates when the down payment is higher.

Shorten the Loan Tenure

While longer loan tenures may seem tempting due to lower monthly instalments, they often result in higher overall interest payments. Opting for a shorter loan tenure can help you save on interest charges.

Negotiate with Lenders

Once you have shortlisted a few lenders, don’t hesitate to negotiate the interest rate. Lenders are often open to negotiation, especially if you have a good credit score and a strong repayment capacity. Once you are done with the negotiations, you can narrow down the most suitable lender for you according to your financial situation.

Maintain a Stable Employment History

Lenders consider stable employment as a positive factor while evaluating loan applications. Demonstrating a consistent employment history with a steady income can increase your chances of securing a low-interest two-wheeler loan.

Read the Fine Print

Before finalising a two-wheeler loan, carefully read the loan agreement and terms and conditions. Pay attention to details such as processing fees, prepayment charges, late payment penalties, and any hidden costs.

How is the EMI for a Two-Wheeler Loan Calculated?

While applying for a two-wheeler bike loan, it’s necessary for everyone to understand the EMIs associated with it, as it will help in financial planning and stability. What is the precise monthly instalment payment you must make to a lender each month?

You can view the monthly instalments (EMI) for a bike loan of INR 50,000, INR 1 Lac, INR 1.5 Lacs, INR 2 Lacs, and INR 2.5 Lacs here. The interest rates are 11% and 18% for 24 and 48 months, respectively.

Types of Documents Required for a Bike/Two-Wheeler Loan

You should always have your documentation on hand when applying for a loan to minimise last-minute trouble. Please read the page below to learn the list of documents that are required.

Individuals Making Salary Documents

  • Identity Documentation
  • Address Verification Records
  • income documentation
  • Age Verification Papers

Documents for professionals and the self-employed

  • Identity Documentation
  • Address Verification and Income Verification Documents
  • Age Verification Papers

Why Should You Compare Interest Rates Before Applying for a Two-Wheeler Loan?

When it comes to purchasing a two-wheeler, many individuals rely on financing options like two-wheeler loans to make their dream a reality. However, before finalising a loan, it is crucial to consider the interest rates offered by different lenders. Comparing interest rates allows you to make an informed decision and secure an affordable loan that suits your financial capabilities. In this article, we will discuss the importance of comparing interest rates before applying for a two-wheeler loan.

Financial Savings

One of the primary reasons to compare interest rates is to save money. Interest rates can significantly impact the overall cost of your loan. Even a small difference in the interest rate can result in substantial savings over the loan tenure.


Comparing interest rates helps you determine the affordability of the loan. Different lenders may have varying interest rate structures based on factors such as your credit score, income, and loan amount.

Better Loan Terms

Apart from interest rates, lenders may have different loan terms and conditions. By comparing various loan offers, you gain a comprehensive understanding of the loan tenure, processing fees, prepayment charges, and other relevant factors.

Access to Multiple Options

Comparing interest rates allows you to explore a wide range of loan options. Banks, non-banking financial companies (NBFCs), and online lending platforms offer two-wheeler loans, each with its own interest rate structure.

Negotiation Power

Having knowledge about the interest rates offered by different lenders gives you the upper hand in negotiating with them. Armed with competitive offers, you can leverage this information to negotiate for a lower interest rate or better loan terms.

Confidence in Decision-Making

Comparing interest rates provides you with confidence in your decision to apply for a two-wheeler loan. By conducting thorough research and understanding the market rates, you can feel assured that you have made an informed choice.

Factors that Affect Two-Wheeler Loan Interest Rates

When applying for a two-wheeler loan, one of the critical aspects to consider is the interest rate. The interest rate determines the cost of borrowing and plays a significant role in determining the affordability of the loan. Various factors influence two-wheeler loan interest rates, and understanding these factors can help borrowers make informed decisions. we will discuss the key factors that affect two-wheeler loan interest rates.

Credit Score

The credit score of the borrower is an essential factor that influences the interest rate offered by lenders. A credit score is a numerical representation of an individual’s creditworthiness and financial history. Lenders use credit scores to assess the risk associated with lending money.

Loan Amount and Tenure

The loan amount and tenure also impact two-wheeler loan interest rates. Generally, higher loan amounts or longer tenures may attract higher interest rates.

Income and Debt-to-Income Ratio

Borrowers’ income and debt-to-income ratio play a crucial role in determining the interest rate for two-wheeler loans. Lenders assess the borrower’s income to ensure their ability to repay the loan.

Loan Repayment History

Lenders closely evaluate the borrower’s repayment history to assess their creditworthiness. If the borrower has a history of timely payments on previous loans, it reflects positively on their creditworthiness and may lead to lower interest rates.

Market Conditions

External factors, such as market conditions and economic trends, can influence two-wheeler loan interest rates. Changes in the Reserve Bank of India’s monetary policy, inflation rates, and overall economic stability can impact the interest rates offered by lenders.

Type of Lender

The type of lender also affects two-wheeler loan interest rates. Banks, non-banking financial companies (NBFCs), and online lending platforms may have different interest rate structures based on their business models, operational costs, and target market.

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Which bank is best for 2 wheeler loan?

Banks like ICICI Bank, HDFC Bank, SBI, Axis Bank, Tata Capital and many more offer the best 2-wheeler loan.

Can I get a 2-wheeler loan without income proof?

No, the proof of income is one mandatory document that should be produced while applying for a 2-wheeler loan.

Is a two-wheeler loan good or bad?

A two-wheeler loan can be considered good for individuals who are unable to pay the full amount in one go and need some financial assistance.

Does a two-wheeler loan save tax?

If you are a professional, self-employed, or business owner, you are eligible to claim tax deductions on two-wheeler loans.

An author in the making who loves psychological thrillers and worships Marquez, Coelho, Donne, and Atwood. Mansi dabbled with different topics before she finally discovered her finance expertise. She quenches her thirst for the same by writing expert pieces on Urban Money. Her sarcasm is a bit too much, but her lame jokes compensate for everything. An entrepreneur and a writer who loves to binge-eat choco-truffle cake.

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