By jahanzaib 
Bikes are expensive investments requiring significant capital. In that case, opting for a bike loan seems the best alternative.
However, as with any loan, various factors affect the interest rate.
When considering their application, lenders will consider the borrower’s credit history, employment status, and monthly income. The type of bike one is looking to buy will also be a factor, as will the length of the loan and the amount one is looking to borrow.
Interest rates on bike loans can be higher, so shopping around and comparing offers from several lenders is essential. Keep reading to learn more about the factors affecting bike loan interest rates!
Are you planning to get a bike?
Finding a two-wheeler requires figuring out what kind of bike one can afford.
Do not let the excessive price of a bike deter you from purchasing it if you are shopping for one. Two-wheeler loans allow customers of all ages to apply by requiring a modest down payment and the remaining loan to be paid in EMI.
What factors affect bike loan interest rates?
Numerous factors affect bike loan interest rates; some of them are:
1. Credit score
The amount of funds a person may borrow depends largely on their credit scores. A person with a better credit score is less likely to default on any loans. They will be charged a lower interest rate because they will assure the lender of their credibility.
However, if borrowers have a bad credit score, lenders might deny them a loan or charge a lower interest rate.
2. Age
The borrower’s age has an impact on the bike loan interest rates as well. A person’s age affects the time it takes to repay a loan.
Thus, younger people tend to receive a lower interest rate than older folks as the tenure of the bike loan is longer.
A person about to retire might not have the money to make the payment; thus, the interest rate will be higher.
With Muthoot Capital, individuals can avail of bike loans instantly with a hassle-free process, minimum documentation, and easy-to-meet bike loan eligibility requirements.
3. Income
Lenders use various factors to set interest rates, including income. The risk associated with granting the desired loan amount is determined by comparing one’s net income to the EMIs on their bike loan.
If a person is earning well, the interest rate will be lower. In contrast, a person with an unstable income may have a higher interest rate.
Due to a salaried person’s constant and reliable income, most financial institutions often provide a lower interest rate.
4. Loan tenure
A person’s interest rates are also based on the loan’s length. The loan’s term is the time frame during which a borrower must repay the whole amount borrowed plus predetermined interest.
However, interest rates are lower for a shorter repayment period because it lowers the risk for the lender.
Must Read: 5 Key Factors That Decide Your Two Wheeler Loan Interest Rate
5. Bike model
The model and kind of bike borrowers desire to purchase will impact the interest rate.
The bike’s model and the price will be strongly associated with the interest rate. Therefore, the more expensive the bike is, the higher the interest rate and vice versa.
6. Down payment
Down payment refers to the percentage of the value of the bike a person puts towards securing a loan.
A person who makes a sizable down payment gets a reduced interest rate. Therefore, the interest rate on a bike loan will be lower the higher the down payment amount.
Conclusion
Numerous factors affect bike loan interest rates, including the bike type, the loan size, the repayment period, and the borrower’s creditworthiness. By understanding these factors, borrowers can shop for the best terms and rates.
The procedure may be streamlined and take less time by selecting the appropriate financial institution.
Muthoot Capital, one of India’s best bike loan providers, offers loans at affordable interest rates, with an easy and quick process and easy-to-meet bike loan eligibility requirements.