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Two Wheeler Loan

Tips to consider before taking a two-wheeler loan

17 Jul 2025 by Team FinFIRST

 

Getting a two-wheeler loan can be a daunting task for many people. With so many lenders offering different loan terms and conditions, it can be hard to know which one is the best for you. In this article, we will discuss everything you need to know about two-wheeler loans, from the eligibility criteria, loan interest rate to the different types of two-wheeler loans available. We will also provide tips on how to make sure you get the best deal and enjoy a hassle-free loan experience.

For those who do not want to pay a large amount from their savings, a two-wheeler loan can be useful. This way, you can buy one of choice at an attractive two-wheeler loan interest rate and repay the amount through equated monthly instalments (EMIs).

Let's take a closer look at the benefits of a two-wheeler loan, the eligibility criteria, documentation and process. 

Types of two-wheeler loans

Depending on whether you pay a security or not, there are two types of two-wheeler loans in India: -

· Secured loan

In this type of two-wheeler loan, you need to submit an asset as collateral to obtain the loan. You can get this loan at a low-interest rate. However, if you fail to repay your loan on time, you will lose the asset that secures the loan.

Secured loans are suitable for borrowers who have assets they can pledge (such as fixed deposits or property) and are looking for lower interest rates. The presence of collateral reduces the lender’s risk, which is why these loans are often approved faster and offer higher loan amounts. However, it’s essential to be disciplined with repayments to avoid losing the pledged asset.

· Unsecured loan 

You don’t have to submit collateral or security to obtain an unsecured two-wheeler loan. Such a loan may require a high down payment and a high rate of interest. Generally, lenders may require you to pay around 30% of the asset amount in cash for an unsecured loan. 

Unsecured loans are ideal for those who do not wish to pledge any personal assets. However, because these loans are riskier for the lender, they usually come with stricter eligibility criteria, higher interest rates, and strict credit checks. Maintaining a good credit score and stable income can improve your chances of approval.

Choosing between a secured and unsecured two-wheeler loan depends on your financial profile and risk appetite. Evaluate both options carefully to select the one that aligns best with your repayment ability and long-term financial goals.

Benefits of taking a two-wheeler loan
 

Opting for a two-wheeler loan comes with numerous advantages, making it a preferred choice for many buyers. Here’s why:

1. Immediate access to funds

A two-wheeler loan enables you to purchase the bike or scooter of your choice without having to arrange the entire amount upfront.

2. Flexible loan options

You can choose to include a guarantor or co-applicant to improve your eligibility or secure a larger loan amount. For applicants between the age of 18 to 21 years, a co-applicant is mandatory to apply for an IDFC FIRST Bank bike loan. IDFC FIRST Bank also offers affordable two-wheeler loan interest rates starting at 8.5% p.a. for premium bikes, 15.99% for EV bikes, and 18.99% for commuter bikes.

3. Comfortable repayment tenure

Enjoy flexibility in selecting a loan tenure that suits your financial situation depending on the two-wheeler you are planning to buy. Repay the loan comfortably through Equated Monthly Instalments (EMIs) that fit within your budget. IDFC FIRST Bank offers you the freedom to choose the loan terms and rate of interest based on the type of bike you are buying. Affordable EMIs

With a range of interest rate options and repayment periods, your EMIs can be tailored to remain affordable throughout the loan tenure. This makes managing your monthly finances easier. Even for the premium café racer segment where bike prices start at ₹3.5 lakhs, the EMI at IDFC FIRST Bank begins at just ₹8,048.

4. Opportunity to build credit score

Timely repayment of your EMIs reflects positively on your credit history. This helps you gradually build or improve your credit score, which can benefit you while borrowing loans in the future.

5. Minimal documentation and quick processing

Most lenders today offer a simple and paperless loan application process, resulting in faster approval and disbursal. With IDFC FIRST Bank, you can get a loan approval on the same day you apply for the loan depending on your documentation and eligibility.

Two-wheeler loan eligibility and documentation
 

You need to meet the following two-wheeler loan eligibility criteria to apply: 

  • You must be a resident of India
  • You must be above 21 years
  • If you are between 18 and 21 years, it is mandatory to have a co-applicant

Here are the two-wheeler loan documents you need to submit: 

  • A passport-size photograph
  • A valid identity or address proof, such as an Aadhaar card, voter’s ID, driving license, or passport 
  • The completed loan application form

Things that affect the two-wheeler loan approval
 

You need to consider the following things before applying for a two-wheeler loan:

· The loan amount
 

If you apply for a high two-wheeler loan amount, the interest rate will also be high. This is because the larger the loan amount, the higher is the risk to the lender. In case you default on your payments, the lender may not recover the outstanding debt even after confiscating the vehicle as the two-wheeler's value will have depreciated.

· Minimum income
 

You must meet a minimum annual income to qualify for a two-wheeler loan. The income proof shows your ability to repay the loan. While the income eligibility varies from bank to bank, a higher income may fetch you a higher loan amount.

· Credit score
 

Your credit history and credit score are crucial for obtaining a two-wheeler loan. Your score should be 750 or more to qualify for a two-wheeler loan. If your credit report has payment defaults, unpaid EMIs, or hard queries, the lender may reject your loan request.

· Minimum work experience
 

Your occupation and work experience will also influence the lender’s decision. You need to have a minimum of six months’ work experience in your current job to get a two-wheeler loan. Besides, if you have a steady job, you are more likely to get approved because it is assumed you can pay off the debt in a timely manner.

· Debt-to-income ratio (DTI)
 

Your debt-to-income ratio is the amount that will remain after you pay the EMIs for your existing loans. Your lender may reject your loan application if your DTI is lower than 40 and other parameters are not met. 

You can calculate your DTI using the following formula –

DTI = Existing loan EMIs / Gross monthly income

There are other crucial aspects of borrowing, including insurance, loan tenure, EMI calculation and more.

Essential tips to know before taking a two-wheeler loan
 

Taking a two-wheeler loan can make your dream of owning a bike or scooter achievable. However, making an informed decision is key to ensuring a smooth borrowing experience. Here are some essential two-wheeler loan tips to consider before applying:

1. Check your credit score
 

A good credit score increases your chances of getting a loan at a lower interest rate. Review your credit report beforehand to check your eligibility.

2. Compare loan offers
 

Don’t settle for the first offer you get. Compare interest rates, processing fees, tenure options, and prepayment charges across lenders to choose the most suitable deal.

3. Determine loan affordability
 

Assess your monthly income and expenses to arrive at an EMI amount you can comfortably afford. Use a two-wheeler loan EMI calculator from IDFC FIRST Bank to plan better.

4. Understand all charges
 

Apart from interest rates, pay attention to administrative fees, documentation charges, stamp duty, and insurance costs to get a complete picture of the total loan cost.

5. Evaluate insurance options

 

Ensure you purchase insurance coverage to protect your two-wheeler against damages, theft, and third-party liabilities.

6. Read the fine print
 

Always read the terms and conditions carefully to understand penalties, foreclosure clauses, and hidden charges.

Being mindful of these factors can help you secure a two-wheeler loan that aligns with your financial goals, ensuring a stress-free ownership journey.

Conclusion
 

A two-wheeler loan offers an affordable and convenient way to own your dream bike or scooter. However, before applying, it is crucial to understand key aspects such as eligibility criteria, required documents, interest rates, tenure options, and insurance coverage. Knowing how factors like your credit score, income, debt-to-income ratio, and work experience influence loan approval can help you make informed choices and improve your chances of getting favourable terms. Additionally, using tools like the two-wheeler loan EMI calculator can help you plan repayments smartly.

Consider additional charges such as processing fees and insurance premiums. Whether you choose a new or pre-owned two-wheeler, a well-planned loan ensures a smooth and hassle-free buying experience. Explore options like IDFC FIRST Bank’s instant two-wheeler loans to get started!

Disclaimer

The contents of this article/infographic/picture/video are meant solely for information purposes. The contents are generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. The information is subject to updation, completion, revision, verification and amendment and the same may change materially. The information is not intended for distribution or use by any person in any jurisdiction where such distribution or use would be contrary to law or regulation or would subject IDFC FIRST Bank or its affiliates to any licensing or registration requirements. IDFC FIRST Bank shall not be responsible for any direct/indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information mentioned. Please consult your financial advisor before making any financial decision.