Fullerton India Credit Co. Ltd. is Now SMFG India Credit Co. Ltd.

5 Factors that Affect Two Wheeler Loan Interest Rates

Published on Dec 27, 2021Updated on Jan 25, 2024

5 Factors that Affect Two Wheeler Loan Interest Rates

Do you know- about 75% of the two-wheeler purchases in India are funded by loans!

The rise in two wheeler loan percentages has been contributed by easy access to finance, competitive interest rates, easy repayment options, and increased aspiration of people. 

But, have you ever thought- why does the two wheeler loan interest rate vary for each borrower? And, despite being a secured form of loan, why do lenders sometimes don’t approve the two-wheeler loan applications?

The question intrigues many. Therefore, in this blog article, we will discuss the top 5 two-wheeler loan interest rate factors in India.

  • Credit Score: 
    A good credit score is vital for the successful approval of any two-wheeler loan application. Evaluating credit score helps lenders to understand the creditworthiness of the borrower and the ability to repay the borrowed amount on time. 
    Having a credit score of at least 652 is one of the important criteria required for a two-wheeler loan application to be approved by SMFG India Credit*. The higher your credit score is, the better are your chances to get a two-wheeler loan
  • Income Level: 
    Before approving your two-wheeler loan application, lenders usually check your income to determine your repayment capability of the loan. Most lenders require borrowers to have a minimum monthly salary of INR 20,000 - INR 25,000 (depending on location) to consider a two-wheeler loan application. 
    To get a two-wheeler loan at a lower interest rate, you should have a steady flow of income. The higher your income level, the better are your chances of getting a low-interest rate. 
Must Read: 4 Good Reasons To Opting Loan While Buying Two Wheeler
  • Down Payment: 
    Down payment refers to the upfront amount that is paid to secure the purchase of a two-wheeler or any other expensive product. This amount needs to be paid from your own pocket. For instance, making 20% of the two-wheeler cost as a down payment. 
    While taking a two-wheeler loan, the size of the down payment amount plays an important role in determining the interest rate. The higher the down payment amount, the lower will be the interest rate as the lender. SMFG India Credit offers eligible applicants zero downpayment on two-wheeler loans (100% LTV)*for select models. 
  • Two-wheeler Model: 
    The type, model, and manufacturer of the two-wheeler has a big impact on the determination of the two-wheeler interest rate. Lenders prefer financing the two-wheeler models that have high resale value. 
  • Existing Debts: 
    If your existing EMIs is more than 60% of your monthly salary, lenders may reject your two wheeler loan application. Thus, you should ensure that your existing EMIs are as low as possible before applying for the loan. The lower it is, the higher is your ability to negotiate a better interest rate. This is especially true if the resulting EMI from your two-wheeler loan would be a small part of your monthly salary. To check this, you can use our free online two-wheeler calculator

Two-wheeler Loan Eligibility Criteria

The following are some of the basic bike loan eligibility criteria at SMFG India Credit:

  • Must be of 18 years of age and above while applying for the loan and not exceed 65 on the maturity of the loan
  • Must be an Indian resident and is residing at the same given address at least for the last 12 months
  • Should be a salaried employee with at least one year of work experience. Self-employed professionals need to produce ITR of the previous year
  • Should have a good CIBIL score
  • Should meet the minimum income level as per SMFG India Credit’s policy at the time of application.

Please note that final eligibility will also depend on several other criteria such as existing debts, credit history, location, and SMFG India Credit’s policy. Fulfilling all the required eligibility criteria can help you fetch an attractive interest rate on the two-wheeler loan. 

Must Read: How to Buy a Bike on EMI?

Tips to Lower your Two-wheeler Loan Interest Rate

  • Improve your CIBIL Score - Apply once it goes above 700 to negotiate the best rates.
  • Improve your Debt-to-Income Ratio - Increase your disposable income percentage.
  • Negotiate with the Lender to Get Better Rates - Consider making a high down payment.
  • Consider Taking the Loan from your Existing Lender - Maintain a good relationship with the lender.

*Terms and Conditions apply. Loans at the discretion of SMFG India Credit Co. Ltd. (Formerly Fullerton India Credit Co. Ltd.)


While these are some of the broad bike loan interest rate factors, there may be other lender-specific factors, which you should know before taking the loan. It will help you to plan your two-wheeler loan in a better way and work in your favor in improving your credit score in the long term.

And, lastly, always ask the lender about any existing offers.

* Please note that this article is for your knowledge only. Loans are disbursed at the sole discretion of SMFG India Credit. Final approval, loan terms, disbursal process, foreclosure charges and foreclosure process will be subject to SMFG India Credit's policy at the time of loan application. If you wish to know more about our products and services, please contact us

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