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Two Wheeler Loan Repayment Tips

Two Wheeler Loan Repayment Tips

Two Wheeler Loan Repayment Tips

Two-wheelers are a lifeline in India. Bikes and scooters are more affordable when compared to cars and are easy to navigate through congested lanes and dense traffic. Students, professionals, homemakers, youngsters, and seniors can all be seen zipping on their two-wheelers across villages, small towns, and big cities all over India.

The Covid-19 pandemic has emphasized the need to travel safely, and two-wheelers offer a solution. If you do not have sufficient funds, a bike loan can help you get a vehicle of your choice. When you take a loan, you need to pay it as per the agreed terms and conditions. Here we offer you a few tips to pay your bike loan easily.

What is a Bike Loan?

As the name suggests, a bike loan is a loan to buy a bike or a two-wheeler of your choice. Two-wheeler loans are secured loans as the vehicle for which you take a loan becomes collateral for the loan or is “hypothecated” to the lender. The lender has a safety net in the form of the bike or scooter if the borrower defaults.

The lender has the right to possess the vehicle in case of a default. When you repay all your loan dues, you need to terminate the hypothecation bond and complete the formalities to get your two-wheeler transferred to your name.

Almost all banks and financial institutions offer two-wheeler loans. All lenders have eligibility criteria that you must fulfill to avail of a loan. You are also required to submit the required documents when you apply for a loan.

Interest rate, other charges, eligibility criteria, loan to value ratio, and loan tenure may vary depending on the lender's policies. You can check the documents required and the eligibility criteria online. Apply for the loan after ensuring that you fulfill the required eligibility requirements laid down by the lender. Doing your homework before you apply for a loan saves you from the application getting rejected.

When you are looking for lenders, keep in mind how much you have saved for your loan. Some lenders may offer you loans up to 90% of the vehicle cost, while some may provide less. If the loan to value ratio is less you will have to make a bigger down payment.

Tips To Pay Your Bike Loan Easily

When you take a loan, you sign a loan agreement that details your repayment terms and other loan details. You must pay your dues in a timely and disciplined way; here are a few tips to pay off the two-wheeler loan faster:

  • Make Sure Your EMIs Are As Per Your Repayment Capacity

You have to repay your loan and the interest in monthly installments spread across the loan term. The installments depend on the interest rate, your down payment, and the loan tenure. When choosing a lender, try and find a lender who offers the most competitive rates; this will reduce your EMI burden. If you make a larger down payment, your loan amount decreases and you have to pay smaller EMIs. A longer loan tenure will increase the overall loan cost but will allow you to repay smaller EMIs. A shorter term will help you repay your loan faster and reduce the overall interest burden; but, you will have to repay more every month.

Use an EMI calculator to calculate your installment and adjust your downpayment and tenure so that you can pay your monthly installments. Using the EMI calculator also helps you understand the total interest burden. Not being able to pay your EMIs comfortably could have unpleasant consequences; you might have to pay penalties or, the bank could repossess your vehicle. 

  • Consider Prepaying the Loan

Loans are for a fixed tenure. However, sometimes you may have surplus funds which allow you to prepay your loan before the term ends. This is one of the tips to pay off the two-wheeler loan faster but, most lenders charge a prepayment penalty. If your focus is to repay quickly, then you can overlook the foreclosure charges.

If you want to prepay a loan to reduce the overall interest cost, you must compare the foreclosure charges with the expected savings. Foreclose a loan only if the savings in the interest exceed the foreclosure charges. However, if you have surplus funds, you can pay an extra one or two installments from time to time, without any penalty.

  • Auto-Payment Is Beneficial

Repaying your EMIs on time has many benefits. Timely repayments ensure that you do not have to pay hefty penalties or interest on delayed payments and your credit rating is also not hurt. However, sometimes the borrower may forget to pay the installments on time thus, attracting financial penalties and a hit on the credit score. Setting up an auto-payment facility ensures that your installments are paid regularly on time.

Some lenders may offer discounts when you opt for an auto payment facility which is an added advantage.

  • Research for various Loan options

Before you pick a lender, it is a good idea to shop around for the most favorable terms. A difference of even 0.1% on the interest rate can reduce your EMI burden and the overall interest cost. Shriram Finance offers two-wheelers loans at competitive rates, which can help you reduce your loan burden.

Compare other loan conditions like flexibility in the repayment schedule, penalty charges, processing charges, and the loan tenure to choose a lender who offers you the best deal. Favorable terms will help you in repaying your loan more conveniently. If you have a good credit score and fit the eligibility criteria, the lenders will be willing to negotiate the repayment terms. 

  • Budgeting is Important

One of the most helpful tips to pay your bike loan easily is to have a budget. Make a budget that takes into account your essential expenditure, your two-wheeler EMIs and your savings. You should use only the spare funds (after paying the above three) for shopping sprees and eating out or any other non-essential expenses. Making a budget ensures that you can pay your EMIs regularly. Regular repayment of your installments will save you from getting penalized for missed payments or delaying your loan repayment schedule. Regular payments also ensure that you have a healthy credit score and can get future loans without hassle.

  • Step Up Your Repayment

You can consider the option of increasing your monthly installment amount as your income rises with time. This will help you reduce the unpaid amount and will ultimately help you repay your loan faster. You can also try to pay a little extra every month; an additional payment of Rs 200 per month would result in paying Rs. 2400 extra per year thereby, reducing your debt burden.


Vehicle loans help you add comfort to your daily commute. Borrow what you can repay after fully understanding the terms and conditions of the loan agreement. Shriram Finance offers quick loans with minimal documentation for your comfort. Be a responsible borrower and repay your dues on time; the tips to pay your bike loan easily shared here can help you be debt-free faster.

Get a two wheeler loan at low interest rates