Get the Lowest Bike Loan Interest: Expert Tips and Strategies
How to Get the Lowest Bike Loan Interest Rate in India?
A two-wheeler or bike loan is offered to individuals wanting to purchase a Bike/Scooter and pay for it in easy EMIs.
It alleviates the burden of paying the entire amount of the two-wheeler in one go. This proposition could be made even better if you get a lower interest rate on the loan.
Here’s how to get a bike loan in India at a lower interest rate.
Build a good credit history -
Lenders prefer borrowers with a good credit history as they are considered less risky. It’s advisable to find out your credit score through a credit rating agency like CIBIL.
This score is a reflection of your credit history. Usually, anything above 750 is considered a good credit score and will help you get a lower-interest-rate bike loan.
But if you have a lower credit score, you can improve it by -
Paying off your existing loans timely
Considering debt consolidation, if you have multiple loans
Paying your credit card bills on time
Managing a diverse credit mix
Figure out the maximum bike loan amount -
Lenders in India offer up to 100% funding for a two-wheeler. They also offer pre-approved offers to applicants with good credit history and the ones they already have a working relationship.
As an applicant, you must figure out the maximum amount you want to borrow before applying for a bike loan. A higher loan amount means you can fully fund your two-wheeler purchase, but it may come at a higher interest rate.
Choose the right loan tenure -
It’s important to strike the right balance between loan tenure and levied interest rate. It’s advisable because the right loan tenure can help you get a lower interest rate. However, if the tenure is short, you may have to pay higher EMIs.
ICICI Bank offers bike loans at attractive interest rates with a tenure of up to 4 years. We also offer you the flexibility to choose the loan amount and tenure per your needs. This means you can determine the tenure and EMIs that suit your budget.
Make a higher down payment -
Making a higher down payment lowers the principal amount, meaning you’ll borrow a lower loan at an attractive interest rate. It also demonstrates to the lender that you are a responsible borrower.
However, you should only make a higher down payment if the chances of an emergency propping up are low, or you have access to some disposable income. And you can just demonstrate to the lender that you are a responsible borrower through a good credit history.
Provide a proper source of income -
Lending institutions prefer borrowers with a stable source of income. If you fail to provide a valid source of income, lenders may levy a higher interest on the bike loan. Also important that you provide documents related to your pay slips and Form 16.
Providing details about the source of income is even more crucial for self-employed loan applicants. So make sure to give all the necessary income documents and bank statements to increase your chances of getting a lower interest rate.
Work on your Debt-to-Income (DTI) ratio -
DTI ratio is the percentage of your monthly income that goes towards paying off your debts. Your DTI ratio is an important factor that lenders consider when determining the interest rate for a bike loan.
It is advisable to work on your DTI by paying off your debts or consolidating them into a single loan. This can help you lower your monthly debt payments and improve your DTI, increasing your chances of getting a lower interest rate on a bike loan.
Select the right interest rate: fixed vs floating -
You should choose the right interest rate type for your bike loan. Typically, fixed interest rates are better, especially for two-wheeler loans, empowering borrowers with more control over the EMIs and a sense of financial security.
Moreover, if you foresee a future interest rate rise, you can take advantage of the same by locking your bike loan at a fixed interest rate. So even though floating interest rates can be lower than fixed ones, they may fluctuate, causing you to pay more.
Avoid applying for multiple loans at once -
When you apply for multiple loans simultaneously, it can significantly decrease your chances of approval from any of them. Multiple rejections can adversely affect your credit score, lowering your eligibility for future loans.
Additionally, it may reflect that you lack confidence in your ability to obtain a loan from a single lender, which may create a negative impression on potential lenders. Therefore, it is advisable to research and apply for loans selectively, ensuring that your loan applications are spaced out and made judiciously.
Choose a reliable lender -
Finally, when you're in the market for a bike loan, choosing the right lender can make a big difference in the overall cost of your loan. In fact, it’s the first thing you must consider to figure out how to get a bike loan.
Apart from ensuring the lender offers attractive interest rates, it's important to consider its market reputation and credibility. Some lenders also offer additional benefits like online application tracking, flexible repayment option, loan foreclosure, etc.
ICICI Bank is a reliable lender, making availing bike loans straightforward and frictionless. We enable applicants to get the lowest bike loan interest rate with minimal documentation.
Click here to learn more.
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