Which Bank Offers the Lowest Interest Rate on Two-Wheeler Loans?
In today’s urban lifestyle, a two-wheeler is a necessity to get wherever we want to go on time. It is the most used mode of transport for a great number of working individuals, both male and female. It is important to get a two-wheeler that gives you good mileage and a safe driving experience on Indian roads.
Most leading two-wheelers fall in the price range of Rs.60,000 to Rs.1.5 lakhs. And not many of us can afford to pay the entire amount upfront and we choose to go for a two-wheeler loan. Again, there are a number of lenders offering two-wheeler loans. How does one settle on the right lender for their two-wheeler loan? We have gathered some information that will help you in this decision-making process;
Top 10 Banks Offering The Cheapest Interest Rates On Bike Loans
|Bank||Lowest Interest Rate||Processing fee|
|Axis Bank||10.80% – 28.30%||Up to 2.5% of the loan amount|
|Bank of Baroda||BRLLR + Strategic Premium + 4.00%||2% of loan amount minimum Rs.1,000|
|Bank of India||7.35% p.a. to 8.55% p.a.||1% of loan amount minimum Rs.500 and Max.Rs.10,000|
|HDFC Bank||20.90% p.a.||Up to 2.5% of the loan amount|
|ICICI Bank||9.5% – 26% p.a||2.5% of Loan amount or Max Rs.2500|
|L&T Finance||10.75% p.a. – 15.00% p.a.||Decided by the lender|
|Punjab National Bank||8.70% p.a. to 9.55% p.a.||Rs.500 – Rs.1,000|
|State Bank of India (SBI)||16.25% p.a. To 18.00% p.a.||2% of the loan amount + GST|
|UCO Bank||11.70% p.a.||1% of the loan amount|
|Union Bank of India||9.90% to 10.00%||NIL|
Common Eligibility Criteria for a Two Wheeler Loan
Two-wheeler loan amounts are usually less than Rs.1 lakh and hence the salary requirement is quite low. Another factor that is considered is your credit score. The eligibility factors are common across lenders. We have made a list of the most basic eligibility criteria for your reference:
- Age criteria – Minimum of 21 years and maximum 65 years
- Income criteria – Minimum monthly net pay of Rs. 12,000 per month
- Employment history – Minimum 1 year in the current job
- Credit score – 700 and above
- LTV or Margin – Up to 90% of the vehicles on-road price
Things to look for while Finalising a Two-Wheeler Loan
There are a number of two-wheeler loan products available in the market. We are going to do a little shopping around before we settle on a lender. But what makes one two-wheeler loan better than the other?
- Margin or the LTV (Loan to Value Ratio) – When we go for a loan, we would like to get the maximum amount of our two-wheeler purchase price. Most lenders do not include components like registration charges & insurance in the loan amount. Since we have to bear these amounts, a lender who gives the most out of the two-wheeler’s final cost would be a preferred choice. ICICI Bank and Axis Bank offer up to 100% of the on-road prices as loans. It would be wise to check them out.
- Interest rate – Two-wheeler loans are usually for less amount but longer tenure. The interest rate on these loans ranges anywhere between 7.5% to 28% per annum. Find out the interest rate and calculate the monthly EMI you have to shell out. Also, find out the total amount you would be repaying on the entire loan amount. If this amount is too high, it’s better to avoid those loans. BOI has one of the lowest interest rates starting at 7.35% and next is PNB with 8.70% onwards.
- Processing charges – This is an important component of your loan and many of us don’t pay attention to it. Lenders make a lot of money through processing charges. Since processing charges are a percentage of your loan amount, you need to check how much they are charging. Most lenders charge 1% of the loan amount, which is nominal. But if it is around 4 or 5%, that would be a considerable amount. So go for lenders who charge nominal processing charges.
- Loan processing time – Nobody wants to wait for weeks to get their loan amount. Today everything is instant. Be it a bank account transfer, ordering food, or buying merchandise online; individuals are used to quick processing. Lenders too have to adapt to this fast-paced market. A few years back, loans used to take a minimum of 3-4 weeks to be processed. But with the advent of computers and the internet, they don’t take more than 3-4 business days. There are lenders who offer instant loans. So check the time taken by the lender to process your loan.
- Discounts and Seasonal Offers – Festival times are an important time for Indians to buy new vehicles and household items. So lenders also try to attract borrowers by offering higher discounts on interest rates and other value adds. So look out for such offers and take advantage of them.
Many people believe that a loan with a lower interest rate is the best option, but this isn’t always the case. Other fees, such as processing fees, documentation fees, and other fees, can affect the loan cost. Before you choose a loan, make sure you verify all of these components as well. While public sector banks always come up with better interest rates, private sector banks and NBFCs can offer you a better customer experience.