Must-Know Facts About Considering a Two-Wheeler Loan

Two-Wheeler Loan

A two-wheeler vehicle is among the most popular transportation mediums in India. There are two main reasons behind this popularity: fuel efficiency and the cost of the vehicle. Besides this, two-wheelers are a lifesaver during high traffic on the road.

However, buying a two-wheeler can be expensive for many people. Therefore, a two-wheeler loan is a great choice to finance the purchase.

There are various factors to consider before choosing a loan. Let’s take a deep dive into these factors.

Factors to consider before taking a two-wheeler loan

Here are some of the most important factors to consider before taking a two-wheeler loan.

1. Purpose of the loan

The most crucial factor to consider before taking the loan is its purpose. Unlike some other loans like personal loans, two wheeler loan can only be used to finance the purchase of the vehicle. It can’t be used for any other purpose.

For example, you can’t take a two-wheeler loan to repair an old bike or scooter. Knowing which exact two-wheeler model you want to buy will give you a good estimate regarding the loan amount.

2. Interest rates & repayment terms

The interest rate on any loan represents the cost of borrowing funds. Similarly, for a two-wheeler loan, the interest rate will give you a good idea regarding the cost of borrowing money for the two-wheeler purchase.

A high-interest rate will increase the repayment amount. It will lead to higher EMIs. Therefore, it is highly recommended to compare different interest rates and find the best one.

Besides the interest rate, you should check the repayment terms on the two-wheeler loan. Many lenders allow borrowers to prepay the loan amount without any fee.

However, some lenders charge a prepayment penalty. It is important to check the prepayment terms to avoid any additional charges.

Prepaying a loan can help you save funds on interest charges. Therefore, it is highly recommended to prepay the amount in part or full whenever you can.

3. Eligibility criteria

Eligibility criteria for a bike or two-wheeler loan can be explained as the minimum requirements for getting the loan.

Different lenders will have varied two wheeler loan eligibility criteria. However, there are many commonalities regarding age, income, credit score, etc.

Eligibility criteria are set to avoid applications from people who might not be the right prospect from the lender’s point of view.

Therefore, checking the eligibility criteria the lender sets before applying for a two-wheeler loan is essential.

4. Down Payment

The down payment amount is the upfront money paid by the buyer to purchase the vehicle. Different lenders will have different criteria regarding the down-payment amount.

However, most two-wheeler loans require a down payment of 10 to 25%. The down payment reduces the amount you need to borrow and can also help lower the interest rate on your loan.

Generally, the larger the down payment, the lower the interest rate. Therefore, paying a higher amount as a down payment for any loan is advised. Before applying for the loan, you must have at least 10% of the overall vehicle cost for the down payment.

5. Documentation

The documentation requirements are one of the most important things to consider before applying for a loan.

Most lenders require documents like identity proof, address proof, income proof, credit score, etc.

Depending on the lender’s requirements, you may also need proof of insurance for your two-wheeler and other relevant documents.

It is essential to check these requirements on the lender’s website and have the documents ready before applying for the loan. Not submitting all essential documents can lead to delay or rejection of your application.


A two-wheeler loan is a great way to finance the purchase of a two-wheeler vehicle. However, it’s essential to consider various factors, including interest rate, repayment term, down payment, documentation, etc., before making a decision.

By understanding these factors, you can make an informed decision and choose a loan that meets your financial needs and goals.

Lending intuitions like SMFG India Credit offer a hassle-free loan process and have a customer-centric approach. Apply for a two-wheeler loan today.

Frequently Asked Questions

Q1: What is a two-wheeler loan, and why should I consider it?

A: A two-wheeler loan is a financial product designed to help you purchase a motorcycle or scooter. It’s an excellent option if you need assistance financing your two-wheeler without paying the full amount upfront.

Q2: How does the interest rate on a two-wheeler loan affect my overall cost?

A: The interest rate plays a crucial role in determining the total cost of your loan. A lower interest rate means you’ll pay less over the loan tenure. Compare rates from different lenders to secure the best deal and minimize your financial burden.

Q3: What factors should I consider before applying for a two-wheeler loan?

A: Before applying, assess your financial situation, including your credit score, income stability, and existing debts. Determine the loan tenure that suits your budget and choose a lender with favorable terms. Research thoroughly to ensure you make an informed decision.

Q4: Can I prepay my two-wheeler loan, and are there any charges for doing so?

A: Yes, you can prepay your loan, but it’s essential to check the terms and conditions. Some lenders may charge a prepayment penalty, while others allow it without extra fees. Understanding these details beforehand can help you manage your finances more efficiently.

Q5: How does the loan tenure impact my monthly payments and overall cost?

A: The loan tenure directly influences your monthly installments. Opting for a longer tenure reduces immediate financial strain but may increase the overall interest paid.

Shorter tenures have higher EMIs but result in lower interest costs. Choose a tenure that aligns with your financial goals and capacity.

Q6: Is a down payment required for a two-wheeler loan?

A: Yes, most lenders require a down payment. It’s a percentage of the bike’s on-road price that you need to pay upfront. A higher down payment often leads to lower monthly EMIs and reduces the overall loan amount.

Q7: Can I finance the insurance and accessories through a two-wheeler loan?

A: Many lenders provide the option to include insurance and accessories in the loan amount. It can be convenient as it allows you to cover these costs without affecting your savings. However, carefully review the terms to understand any impact on interest and repayment.

Q8: What documents are typically required for a two-wheeler loan application?

A: Common documents include proof of identity, address, income, and the vehicle’s purchase details. Be prepared with your PAN card, Aadhar card, salary slips, and bank statements. Meeting these requirements expedites the loan approval process.

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