How Do You Calculate Your Two-wheeler Loan Emi?

The need for personal transportation in India is undeniable. Two-wheelers or bikes and scooters are the easiest to maintain and use. Not only are they convenient, but are also affordable. Not taking away from the convenience of it, finances do play an active role in such decisions of individuals to buy a new bike for commuting to work. For those unable to make a complete downpayment for their bike, banks have attractive loans as financing options.

Many banks and financial institutions offer two-wheeler loans with flexible repayment options, making it easier for individuals to own their dream two-wheeler.  Additionally, convenient EMIs allow borrowers to repay the loan over a  predetermined period. However, varying rates of interest create a difference in the EMI amount payable based on the lender.

In this article, we’ll take a look at two wheeler loans and how you can quickly calculate the EMI to ensure you pick the right lending agency for your loan.

How Does a Two-wheeler Loan EMI Work?

EMI is the amount an individual has to pay every month towards the repayment of the loan. It consists of the principal amount and the interest charged on it. The interest rate on a two-wheeler loan is typically fixed, and the loan tenure ranges from 1 to 5 years.

The bike EMI calculation is done using a standard mathematical formula, which takes into account the loan amount, interest rate, and loan tenure. 

Use the formula below to calculate the EMI on two wheeler loans

EMI = [P x R x (1+R)^N]/[(1+R)^N-1]


P= Loan amount 

R= Interest rate per month (rate % divided by 12), and 

N= Loan tenure (months)


Let’s say the bike loan amount is Rs. 50,000. The interest rate is 10% p.a., and the tenure is 36 months. 

EMI = [50,000 x 0.008333 x (1+0.008333)^36]/[(1+0.008333)^36-1] = Rs. 1,605/month

How to Calculate the EMI on a Two-wheeler Loan?

Calculating the EMI on a two-wheeler loan can be done manually using the above formula. However, digital advancements in the financial sector have made the job easier. Now, banks and financial institutions provide online tools and calculators that individuals can use to calculate their EMI quickly and easily. These tools require the loan amount, interest rate, and loan tenure as input and provide the EMI amount as output.

Understanding the EMI calculation process is essential to ensure that individuals know the monthly repayment amount and can plan their finances accordingly. With the availability of online tools and calculators, calculating the EMI has become more convenient and accessible.

What are the Eligibility Criteria to Get a Bike Loan?

Getting a bike loan in India is pretty easy if you check all the boxes. Generally, lending institutions have a set of guidelines by the RBI with a few conditions of their own as the eligibility criteria. For starters, the factors mentioned below decide your eligibility for a bike loan.

    • Legal age to borrow: The borrower must be at least 21 years old to take a bike loan and not more than 65 years upon the loan’s maturity.

    • Income and employment status: Having a steady job and income source can put you on top of the list for a substantial loan amount. Ensure to have all proofs and statements.

    • Credit score health: Since the banks are looking for candidates with low default risks, you need to have a high credit score to get a bike loan with low interest.

    • Availability of all KYC Documents: The borrower must have all valid KYC documents such as a PAN card, Aadhaar card, and passport to ensure verification.

How to Apply for a Two-wheeler Loan in India?

To apply for a two-wheeler loan in India, you can follow these steps:

    • Choose the lender: Every bank offers bike loans at competitive interest rates today. Compare different lending institutions on the basis of their terms and conditions, and choose the one that suits you best.

    • Verify eligibility: It is always good to check your eligibility before applying. It will decrease the chances of your loan being rejected.

    • Submit an application: Once you have decided the lender, visit their official website and apply. Submit all the details and documents to ensure proper verification.

    • Wait for approval: The process of document approval may take from a few hours to a few days. Once the lender is satisfied with their assessment, they’ll pass the loan.

    • Disbursement of the loan amount: When all the formalities are done and your application is approved, you are not far from getting the amount. It gets credited in your account.

Who is Not Eligible for a Two-wheeler Loan?

Some common reasons for loan rejection include:

    • A low credit score

    • Unstable source of income

    • Defaulting on previous loans

    • Incorrect or incomplete documentation

Documents Needed for Two-wheeler Loan:

Ready to get a bike loan? Well, here are the documents you need to get ready before applying.

    • ID proof

    • Address proof (Aadhaar card, passport, driving licence)

    • Income proof (salary slips, income tax returns, bank statements)

    • Vehicle details (invoice, registration certificate)

Interest Rates on Two-wheeler loans:

Loan interest rates on bikes may range between 10% to 24% per annum, based on the bank, loan amount, and the repayment period. The interest rates also differ based on the type of vehicle, brand, the bike’s market demand, and your credit score.

Usually, candidates with excellent credit scores receive a lower interest rate offering due to their capacity to repay. It is always advisable to compare interest rates from multiple lenders before applying for a two-wheeler loan to get the best deal.


Now that you know more about bike loans and how to calculate their EMIs, it will be simpler for you to decide upon a bank that can give you the best possible rates. Make sure to speak to the client relations officer to ensure that you have all the necessary information and then apply. Having your dream bike can now be a reality; all you need to do is apply.

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