Easy Steps to Calculate EMI for Bike Loan

The pandemic has redefined ‘normal’ to us. As many of us have started connecting to the old normal such as going to the office and stepping out of our home more frequently, the need to have a personal vehicle is now more urgent than ever before. If you are concerned about getting finance for the unplanned two-wheeler, then bother not. Here’s everything you need to know about how to calculate emi for bike loan.

Steps to Calculate Your Bike EMI
 
Calculating your bike EMI can be difficult, especially since different lenders offer different financing options and the main verticals keep changing depending on the make and model of the bike you choose. Thus, to simplify the process, here are the most significant steps you will need to follow.
 

1. Figure Out the Actual Price of Your Vehicle

 
The first and undoubtedly most important step is to find the actual price of the vehicle you plan to purchase. If you have checked various makes and models available in the market, you would have realised that dealers generally mention a price range for the vehicle and do not tell the exact amount to be paid.
 
So, you will need to visit the dealer to find the price of the vehicle of your choice. Factors such as model and make determine its price. For example, if want to buy a particular model of Hero bike, chances are that there will be many variants available for that model category. To know the actual cost, choose the model variant as well and sit down with the dealer to discuss the price.
 
While you discuss the price, make sure to take into account the various breakups involved—such as the ex-showroom price of the vehicle, road tax, documentation charges and GST. Once you have all the details, it is easier to calculate the total amount to be paid.
 
Do not forget to negotiate with the dealer and ask them to reduce the base price of your vehicle as this will significantly reduce the overall amount you will be required to pay.
           
                        Also Read: 5 Tips to Pay Your Bike Loan Easily
 

1. Choose an Appropriate Financing Option

 
Once the final price for your vehicle is decided, check for various financing options with the dealer. In most cases, the dealer will have tie-ups with established lenders who specialise in rendering two-wheeler loans. While choosing a financing option, consider:
 
 

• Tenure of the loan
• Interest amount applicable
• Processing time and charges
• Amount of down payment required

 
Remember, lenders in India only finance up to 95% of the current on-road price of the vehicle, which means you will have to pay a down payment to the dealer on your own.
 

1. Take Note of Tenure and Interest Rates

 
The two main factors to consider before taking a loan are its tenure and interest rate. These determine the additional amount you will have to pay to avail the features of the loan. Therefore, consider both these factors with priority while choosing a financing option.
 
Generally, in India, two-wheeler financing options with either a fixed interest system or a rolling interest system. A fixed interest scheme means that you will be paying the same interest amount every month into the loan, while a rolling interest scheme means that the interest amount you are scheduled to pay may vary each month.
 
Being clear about which interest system applies to your loan can not only save you a lot of money in the long run but also save you from financial stress by avoiding a debt trap.
 
                        Also Read: Factors that Affect Interest of Bike Loan
 

1. Calculate the EMI Amount

 
Now that you have completed all the above-mentioned steps, the final part of the process is to calculate and arrive at the EMI amount that you will be required to pay every month. To execute this step, you will need to have the following information with you:
 

• The final price of your vehicle
• The interest rate of the loan
• The tenure of the loan
• Other applicable charges

 
Let’s use an example to understand the calculation process better. Suppose,
 

• The final price of the vehicle is ₹50,000
• The interest rate of the loan is 6%
• The tenure of the loan is 5 years
• Other charges comprise ₹2000

 
The EMI amount payable would be around ₹1083 per month for the next five years.
 
To execute this calculation yourself, you can use this two wheeler emi calculator.
 
Advantages of Taking a Two-Wheeler Loan in India
 
Taking a two-wheeler loan to buy your dream vehicle comes with many advantages, such as:
 

1. Better Planning

 
Since a two-wheeler loan enables you to pay a small amount every month, you can better manage your finances and not burn a hole in your pocket by paying the whole amount at once.
 

1. Lower Cost

 
Due to the wide availability of two-wheeler loans in India, the interest offered by lenders is fairly competitive. This means that you can enjoy the advantages of owning a two-wheeler without burning a hole in your pocket due to high-interest payments.
 

1. Easy Approval

 
Most two-wheeler lenders these days leverage the power of modern technology to instantly approve and disburse a loan, which means you can get your dream bike delivered to you in no time.
 
            Also Read: A Complete Guide To Choosing The Two-Wheeler Loan Tenure

Conclusion
 
Now that you know how to calculate the EMI amount for every month, all that remains for you to do is go ahead and apply for a loan. All the best.