Is it wise to buy a bike with a two-wheeler loan?

In India, two-wheelers have become a popular mode of transportation due to a number of reasons. Firstly, they are relatively affordable and accessible to a larger population compared to cars. They are also easy to maintain and repair. This makes them a popular choice for people with lower incomes or living in rural areas. Secondly, two-wheelers are more maneuverable and can navigate through traffic and narrow roads more easily than cars. This can be especially useful in urban areas where traffic congestion is a common problem.

Thirdly, two-wheelers are more fuel efficient and produce less emissions than cars, which makes them more environmentally friendly. This is an important consideration in a country like India, where air pollution is a significant problem. Given these benefits, individuals turn to bike loans to finance the purchase of their desired two-wheelers.

It can be extremely difficult for people to pay the entire cost of a two-wheeler upfront, as it can cost anywhere from ₹40,000 to well over ₹20 Lakhs. While certain individuals prefer dipping into their savings reserves to pay for the vehicle, bike loans provide greater convenience, along with ease of payment. Today, banks, NBFCs and captive financiers offer EMI options, and these deferred payment plans allow prospective bike owners to pay for the two-wheeler in small instalments.

What is a bike loan?

A bike loan is a type of loan specifically designed for the purchase of a motorcycle or scooter. It is a secured loan that can be used to pay for the full cost of a two-wheeler, or a portion of it. The borrower is then responsible for repaying the loan, plus interest, over the repayment period.

To apply for a bike loan, you typically have to provide proof of income, proof of identity and proof of residence. The lender will then assess your creditworthiness and decide whether to approve the loan, along with the two-wheeler loan interest rate.

The loan amount, interest rate and repayment tenure can vary depending on the lender and your credit profile. Some lenders also offer additional features such as flexible repayment options, top-up loans and insurance coverage.

Can you pay the cost of a two-wheeler upfront?

If you’re purchasing a relatively cheaper two-wheeler, such as an entry-level commuter bike or a scooty, you can entertain the idea of making a lump-sum payment. Paying the cost of a two-wheeler upfront has some advantages, such as not having to pay interest on a loan, or having to worry about loan payments. Additionally, it allows you to own the vehicle outright and avoid the hassle of loan paperwork.

However, paying the cost of a two-wheeler upfront can also be difficult for many people, as it requires a large amount of cash to be available at once. In that case, a bike loan is an ideal option, as it allows you to spread the cost over an extended period, making it more manageable.

Choosing the right lender for the bike loan

An important factor that determines the viability of a two-wheeler loan is the lending entity. Choosing the right lender for a bike loan can help you get the best terms and conditions and make the loan more affordable. Here are some things to consider when choosing a lender.

  • Interest Rates: Compare the two-wheeler loan interest rates offered by different lenders to find the lowest rate. Keep in mind that a lower interest rate will result in lower monthly payments, and saves you money in the long run.
  • Repayment Tenure: Consider the repayment tenure offered by the lender. Some lenders offer longer repayment tenures, which can make your monthly payments more affordable.
  • Eligibility Criteria: Make sure you meet the eligibility criteria for the loan. Some lenders may have higher income requirements or stricter credit score requirements than others.
  • Fees and Charges: Be aware of any additional fees and charges that may be associated with the bike loan, such as processing fees, prepayment penalties, or late payment charges.
  • Customer Service: Consider the customer service offered by the lender. A lender with good customer service can make the loan process more convenient and help you with any questions or issues that may arise.
  • Reputation: Research the reputation of the lender. Read online reviews, ask for recommendations from friends and family, and check if the lender is registered with the Reserve Bank of India (RBI).
  • Compare: Compare the terms and conditions of different lenders to find the best deal.

Benefits of opting for a bike loan

Here are a few reasons why individuals apply for bike loans to purchase two-wheelers in the country.

  • Affordability: Two-wheelers are relatively affordable compared to cars and other vehicles, but the upfront cost may still be too high for some people. A two-wheeler loan allows them to spread the cost over a certain period, making it more manageable.
  • Convenience: Bike loans are generally easier to obtain than other types of loans, such as car loans or personal loans. They typically have fewer requirements and a quicker application process.
  • Low Interest Rates: These loans typically have lower two wheeler loan interest rates than other types of loans, making them more affordable in the long run.
  • Flexibility: Some bike loan providers offer flexible repayment options, such as flexible EMI schemes and longer loan tenures, which makes it easier for the borrower to repay the loan.
  • Necessity: Two-wheelers have become a necessity in India, especially in rural and suburban areas, where public transportation is limited. For many people, a two-wheeler is their only means of transportation to work, school, or to perform other daily activities.

Additionally, with the increasing popularity of ride-hailing platforms, owning a two-wheeler for personal or commercial use is becoming more of a norm in India. Obtaining a loan for that purpose may be an easy and affordable way for people to acquire a vehicle.


Opting for a bike loan is a prudent decision, especially while purchasing an expensive two-wheeler. Lenders offer nominal two-wheeler loan interest rates, provided you have an excellent credit profile, including a high CIBIL score and zero defaults against your name. This way, you won’t have to deplete your savings to purchase your desired two-wheeler or worry about accruing funds. However, once you apply for – and get a bike loan, you have to make payments regularly and on time.

For these reasons, a significant percentage of two-wheeler owners (more than 75%) in India opt for bike loans. However, before approaching a lender, you should do your due diligence and ensure you get the best loan terms possible.

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