What are the Factors that Affect Bike Loan EMI?

With the increasing population in India and traffic on roads, bikes are the most convenient means of transport to avoid traffic. However, everyone does not have the ready finance for purchasing a two-wheeler. Bike loans are readily available from various online and offline vendors in a hassle-free manner at a reasonable interest rate.

If you plan on taking a bike loan, you should be aware of the various factors that can impact your EMI. A bike loan EMI calculator will help calculate the monthly EMI by using the principal amount, the interest charged, and the tenure of the loan.

Let us look into the two-wheeler loan in more detail.

Two-wheeler or Bike Loan in India

A bike loan is a financial tool that allows individuals to borrow money from a lender to buy a two-wheeler. Mostly the borrower is required to pay some amount as a down payment to the dealer. The loan typically covers 80% to 85% of the current on-road price of the bike.

These loans are secured, which means that they come with a low-interest rate and easy repayment plans, making them a viable option for everyone.

The EMI paid by the borrowers includes the principal amount and the interest rate, which is divided into smaller monthly installments. Let us now look at some factors that will determine the EMI on your bike loan.  

  1. Your Credit Score

Your credit score is one of the most important parts of measures of your financial health. It tells your lenders at a glance how responsibly you use credit. The better your score, the easier you will find it to be approved for new loans or lines of credit. A higher credit score (CIBIL) can also open the door to the lowest available interest rates when you borrow.

A credit score is an essential factor when you visit any lender for a loan. A credit score is a number between 300 to 900 that determines the creditworthiness of the borrower. It is assigned by credit rating agencies, after taking into consideration various aspects like:

  1. The total number of loans you have taken in the past. 
  2. The total amount of loan you have taken. 
  3. Several timely payments you have made in the past.
  4. Missed payments, if any.
  5. To reduce your EMI, work on improving your credit score, which will reduce your interest.
  1. Loan Amount

The second factor that will affect your EMI is the loan amount borrowed. Higher the cost of your bike more will be the monthly EMI. So, make sure that you plan the bike you want to buy and accordingly apply for the loan based on your repaying capacity.

The best way of doing this is by using the bike loan EMI calculator. Based on the loan amount, interest, and tenure, the calculator helps estimate your monthly repayments. As a higher amount comes with a higher risk of default, the lenders also charge a higher interest rate to cover their losses and justify their risk. 

  1. Loan Tenure

The general rule of thumb followed by lenders is that the longer the loan’s tenure, the higher will be the interest rate. The longer the borrower takes to pay the loan back, the higher is the risk of default. To cover this risk, lenders charge a higher interest rate.

On the contrary, if your loan tenure is higher, the EMI paid will be less as the principal amount is divided for a longer duration. So, if you want to reduce your EMI, you can choose the tenure that does not increase your interest rate too much but still offers you enough leverage to pay your monthly EMI with much stress. The EMI loan calculator will help you in making the right decision.

  1. Dealership Location

Buying a bike involves different prices and taxes, so the same model’s price can vary location-wise. To ensure that your EMI is reduced, you can opt for a dealer who is selling the bike at a lower price.

The bike price will change your loan amount, which will reduce the interest rate of a two-wheeler loan. So make sure to do your research correctly and choose a dealership where the price is significantly low.

  1. Secured vs Unsecured Loan

Now that you are well-aware of the differences between secured loans and unsecured loans, you might have a clearer idea about the entire secured vs. unsecured loan debate. 

Loans can be of two types: Secured, where the borrower is required to pledge some asset as security and unsecured, where no security is required. One can avail of either of the two loans to buy a bike, but both come with separate loan terms.

Based on the lender you are choosing, you can ask for the interest rate and the loan tenure being offered for both secured and unsecured loans. It will help you in making better decisions. Usually, the interest rate charged on a secured loan is lesser than that of an unsecured loan.


Owning a bike can be a dream for many, but financial constraints can pull you back. With the two-wheeler loan, you can easily get a bike and swirl around in pride. Now that you know the various factors that can impact your EMI make sure that you choose your lender wisely.

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