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How to Reduce Bike Loan EMI: Top 5 Ways


Key Highlights

  • Loan amount, interest rate, loan tenure, and credit score are crucial factors that influence your bike loan EMI.
  • A substantial down payment decreases the principal amount, resulting in a lower monthly instalment
  • When considering how to reduce bike loan EMI, opting for a longer loan tenure can lead to smaller monthly payments, making it more manageable for your budget.
  • Refinancing your bike loan by transferring it to another lender offering lower interest rates can help in reducing your EMI burden.
  • Consider making prepayments towards your bike loan whenever possible.

Nearly 15 million two-wheelers were sold in India in 2022 alone. When the burden of the monthly bike loan EMI becomes a strain, it means that the monthly payments for the loan are becoming difficult to manage or causing financial stress. Is there a way to make it more manageable? Absolutely! Let's delve into five strategies on how to reduce bike loan EMI that help make monthly financial commitments more manageable. 

Learn how to reduce bike loan EMI and discover how Shriram Finance can help you manage your two-wheeler EMI.

What is EMI? 

EMI stands for Equated Monthly Instalment. It's a fixed amount paid by a borrower to a lender at a specified date each calendar month as part of the repayment plan.

EMIs are used to pay off both the principal and the interest on a loan over a specified period of time. Each EMI payment consists of a portion that goes towards interest and a portion that goes towards the principal. This helps in repaying the loan in a more organised and structured manner.

There are two types of EMI payments to pay off a loan:

  • Fixed EMI: The equated monthly instalment remains constant throughout the loan tenure, comprising both principal and interest.
  • Step-up or Step-down EMI: The instalment amount varies over time. Step-up EMI starts low and increases, while step-down EMI starts high and decreases. These options cater to different income scenarios and financial needs.

Factors Affecting Bike Loan EMI


Effects on Loan EMI

Loan Amount

Higher the loan, higher the EMI.

Interest Rate

Lower interest rates lead to lower EMIs.

Loan Tenure

Longer tenures can result in reduced EMIs, but higher total interest paid.

Credit Score

A good credit score can secure lower rates, thus reducing the EMI.


5 Tips to Reduce Your Two Wheeler Loan EMI

  1. Make Larger Down Payment

One effective strategy to reduce your two wheeler loan EMI is making a larger down payment at the time of purchasing the bike. This reduces the principal amount of the loan, subsequently leading to a lower EMI.

  1. Choosing Longer Tenure

Opting for a longer loan tenure can also lead to reduced bike loan EMI. It's important to find a balance between affordable monthly payments and minimising overall interest when planning how to reduce bike loan EMI.&

For example, if you take a loan for ₹10,000 at an interest rate of 10% per annum, for 1 year, your Equated Monthly Instalment (EMI) would be ₹879. If the tenure extends to 2 years, the EMI reduces to ₹461.

  1. Opt for Low-Interest Loan

Another technique to reduce your loan EMI is to look for bike loans with lower interest rates. Shriram Finance, for instance, provides bike loans at  competitive interest rates starting at 11.5% p.a*.

Different financial institutions have varied offerings, and it's important to conduct research to get the best deal. Opting for Shriram Finance could be a beneficial move to reduce bike loan EMI and other benefits like flexible tenure and for your vehicle.

  1. Refinance

Refinancing involves shifting your loan to another lender offering lower interest rates, effectively reducing your EMI. For instance, if your current lender charges 15% but another offers 12%, transferring could reduce your payments. 

But, it's important to account for any associated fees or penalties before shifting loan providers to reduce your loan EMI. Find out your EMI details with Shriram Finance using our two wheeler EMI calculator and take an informed decision.

  1. Making Prepayments

As mentioned before, a portion of your EMI goes toward interest and a portion of it goes to principal repayment. Prepayment means paying an extra amount towards your loan principal, thus reducing the remaining loan balance. This way the interest calculated at the end of the month will also reduce. So the next month, a larger portion of your EMI will go towards principal repayment. That is, the EMI and the loan period will reduce. This can be an effective strategy to reduce your two wheeler loan EMI. However, we must understand the terms well before going ahead with this strategy. 

Summing up

Move towards financial stability by reducing your two-wheeler loan EMI with Shriram Finance. Offering competitive rates, flexible terms and 100% financing for your two-wheeler, Shriram ensures a hassle free borrowing experience.

Choosing a longer tenure, making prepayments when possible, or considering refinancing are various routes that you can take to reduce your two wheeler Loan EMI. Lower your EMIs with Shriram Finance and explore their offerings today!


  1. How to reduce your bike loan EMI?

Strategies such as prepaying a part of the loan, renegotiating the interest rates or extending the loan tenure can help effectively reduce your two wheeler loan EMI.

  1. Does prepayment reduce EMI?

Yes, indeed, prepayment can help reduce EMI. It significantly reduces the principal loan amount, resulting in lower EMIs and thus it's an effective method to reduce your loan EMI.

  1. Which is better: increasing EMI or prepayment?

Both increasing EMI or prepayment have merits in reducing total loan liability. However, prepayment can help reduce your two wheeler loan EMI. By paying a lump sum amount towards the principal balance, you directly reduce the outstanding debt, leading to lower interest charges and a faster loan payoff. This approach allows for greater interest savings and the potential to become debt-free sooner. 

  1. Why should I compare different loan offers to reduce my EMI?

Different lenders may offer different interest rates and terms for the same loan amount. By comparing, you can choose the loan offer with the lowest interest rate, thus reducing your EMI.

  1. Does making a larger down payment impact my two wheeler loan EMI?

Absolutely, making a larger down payment reduces the principal amount you need to borrow, hence lowering your monthly EMI. It also reduces the overall interest you pay throughout the loan term.

Get a two wheeler loan at low interest rates