Exploring Different Financing Options for Two-Wheeler Loans

Singh Anusha Singh Anusha
Aug 19, 2023 5 min read
Exploring Different Financing Options for Two-Wheeler Loans

The two-wheeler industry has been a major contributor to the Indian economy, with millions of bikes sold each year. For most individuals, a two-wheeler is the first vehicle they ever own. However, the bike is not a luxury but a necessity for many. If you are planning to bring home your dream bike but don't have enough funds, you can take a loan on a two-wheeler purchase. There are other financing options too, which you must know about and explore to clear up your dilemma. These include savings, credit cards, etc.

So, which option would you choose to buy your dream bike? Whether it’s better to depend on your savings, use your credit card, or get a two-wheeler loan? Let’s find out.

  1. Pay the Cost from Your Savings
  2. Use a Credit Card
  3. Borrow a Two-Wheeler Loan

How Does a Bike Loan Work?
Benefits of Borrowing a Two-Wheeler Loan
The Process to Get a Two-Wheeler Loan

1. Pay the Cost from Your Savings

One way to pay the cost of your bike is to use up your savings. If you have enough funds in your account, you can pay the entire price upfront and purchase the bike you want. If the savings are insufficient, you can set a goal and reduce your unnecessary expenses to save enough to buy the bike. Set aside some part of your income regularly to achieve that purpose.

While paying the bike’s cost from your savings is the simplest way to purchase your dream vehicle, it is not always a financially-sound strategy. You must keep your savings intact for emergencies and other necessities like education. Moreover, saving enough to fund the bike purchase will take a long time, especially if your income is limited. Cutting back on expenses may also affect your lifestyle. However, if you have sufficient income and can save enough even after building an emergency fund, funding the purchase from your savings will save money on the interest cost.

2. Use a Credit Card

Using your credit card to purchase a bike is simple and more efficient than consuming your savings. You can make the bike yours just by swiping a credit card. However, this financing option works only if you buy a two-wheeler in a low price range. That is because credit cards have maximum credit limits within which you can purchase. While credit cards allow you to convert the bike's cost into EMIs, the substantial interest rates imposed by credit card providers considerably inflate the bike's overall price.

Using a credit card to buy a bike is feasible, but you must exercise extra caution. You must go for this option only if you can pay the bills on time. If you miss the bill payments, you will end up paying a high-interest cost along with penalties and other charges.

3. Borrow a Two-Wheeler Loan

Borrowing a bike loan is better than using your savings or credit card. Many NBFCs offer these loans to help people purchase their dream bikes. It is affordable, and you can get one with minimal documentation. The interest rates are lower than credit cards, and you can use a two-wheeler loan calculator to distribute the cost in easy EMIs. Read on to learn more about these loans and their benefits.

How Does a Bike Loan Work?

A bike loan is a popular funding option for purchasing a two-wheeler. Many reputable NBFCs finance up to 95% of the bike's cost. You must pay the remaining price from your savings as a down payment. Therefore, you just need to pay 5% of the bike's cost. The lender will take care of the rest and charge an interest rate for their service. The repayment tenure begins once you purchase the bike and bring it home. The loan provider distributes the loan amount and interest rate in equated monthly installments (EMIs). You must pay one installment each month until you pay off the entire borrowed amount, failing which the lender will seize your bike and sell it to recoup their outstanding balance.

Benefits of Borrowing a Two-Wheeler Loan

With several NBFCs offering bike loans at competitive interest rates, purchasing a two-wheeler has become more accessible. Here are a few benefits of borrowing a bike loan over other financing options:

  • High LTV Ratio: Lending institutions finance up to 95% of the bike's cost based on your eligibility and repayment capacity.
  • Lower Interest Rates: Bike loan interest rates are much lower than credit cards, letting you bring your dream bike home without paying an exorbitant extra cost.
  • Improved Affordability: While savings and credit card limits restrict your bike choice, you can look for a better model with funding from a bike loan.
  • Flexible Repayment: A two-wheeler loan calculator helps you choose a repayment tenure, usually up to 48 months, with affordable EMI options. Evaluate your monthly budget and opt for a loan term with budget-friendly EMIs.
  • Easy Accessibility: Lending institutions have simple eligibility criteria and minimal documentation requirements to make bike loans easily accessible to all.
  • Keep Savings Intact: You can fund the bike’s cost with a loan and keep your savings intact. That means you don't need to exhaust your emergency funds to purchase your dream bike.
  • An Opportunity to Boost Your Credit Score: Taking a loan on a two-wheeler and repaying its EMIs promptly is an excellent strategy to boost your credit score and improve eligibility for more loans in the future.

The Process to Get a Two-Wheeler Loan

The process to apply for a bike loan does not involve any office visits or physical paperwork. You can obtain the required funding using these simple steps:

  • Research and compare the loan plans to get the best deal according to your requirements and repayment capacity.
  • Check the lender’s eligibility criteria and documentation requirements to ensure you can fulfill them on time.
  • Visit the lender’s website or download their app to apply for a two-wheeler loan online.
  • Scan and upload the required documents to complete the application process.
  • Bring your bike home and pay its cost in EMIs.


You can use your savings or credit card to purchase your desired bike. However, borrowing a loan on a two-wheeler is a better way to keep your savings intact and still buy your dream bike. A two-wheeler loan calculator helps you choose the best loan plan according to your affordability and monthly repayment capacity. So, your bike purchase won’t exhaust your savings or hurt your regular finances.

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