Here’s how a Two-Wheeler Loan Calculator Can Make Your Life Easy

Two-wheelers are among the most popular modes of private transport in India. After all, it’s easier to get around on a bike than wait for public transport. Also, you can manoeuvre smartly in heavy traffic and bikes are affordable too when compared to cars. The two-wheeler market in India hence sees a lot of demand. However, for the average buyer, it can be tough to shell out the entire cost of a two-wheeler in one go. Luckily, a bike loan can help out. And a two-wheeler loan calculator can make your life all the more easy.

More on two-wheeler loans

Before you get started with a two-wheeler loan calculator, it is important to know about these loans in detail. These days, two-wheeler loans are available at attractive interest rates from banks, NBFCs and other lending institutions. The numerous options can make it overwhelming for you to choose any one. Now, most borrowers tend to go for lenders that offer the lowest interest rates. However, the rate of interest on a two-wheeler is dependent on a lot of factors:-

• Credit history – this shows if you are capable of repaying the loan on time
• Loan amount – depends on the total cost of the vehicle
• Loan tenure – the period over which you can pay back the loan
• Age of the borrower
• Income – Type of employment: salaried or self-employed

Understanding rate of interest

The rate of interest on a two-wheeler loan in turn affects the EMI you pay towards the loan amount every month. EMI is an abbreviation of Equated Monthly Instalment. It is calculated taking into account three factors – Principal Loan Amount, Rate of Interest and Time period to repay the loan amount or the loan tenure. The mathematical formula for calculating the EMI manually is:-
P XR X [{1+R} N] / [{1+R} N-1]

Here:-

P – Principal loan amount
R- Rate of interest per month
N- Loan tenure or number of EMI instalments to be paid
The same can also be calculated using an excel spreadsheet.

The loan calculator

For ease of users, most lending institutions have a two-wheeler loan calculator available on their websites, which you can use to calculate the EMI easily online, before you even reach out to the lender. All you need to do is enter your loan amount, interest rate and your loan tenure, and it will automatically come up with an amount that you need to pay as EMI towards the loan.

Note that the higher the loan tenure, lower will be the rate of interest, and your EMI will be calculated accordingly. You might think of opting for a longer tenure, so that your EMI burden can be lower. However, when you opt for a longer tenure, the interest amount paid over time will be more when compared to a short tenure. Therefore, it is advisable for borrowers to opt for shorter loan tenures with a slightly higher loan amount if possible, as it is more cost-effective in the long run.

To conclude

So, if you are eligible and all your documents are in place, a two-wheeler loan calculator can make your application process very easy. As an informed borrower, you will be in a better position to negotiate with your lender, and grab the best deal on two-wheeler loans.

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