Car Loan vs Bike Loan: Owning a vehicle is no longer a luxury it has become a necessity. But when it comes to buying, many people wonder whether the loan terms for a car are better than for a bike. Both loans are offered by banks and NBFCs, but the difference in EMI, interest rate, and salary requirement can completely change your decision. Let’s break it down in a way that’s easy to understand.
Interest Rate Difference
In 2025, car loans usually come with interest rates between 8.50% to 10.5%, depending on your credit score and bank policies. Bike loans, however, are slightly costlier, often ranging between 10% to 12.5%. The reason is simple: cars have higher ticket size and banks see them as more secure, while bike loans are small in amount and given for shorter tenure, so interest is slightly higher.
Read more: Loan Prepayment: How Much Can You Save by Closing a ₹10 Lakh Loan Early? Full Calculation Explained
EMI Comparison for Car vs Bike
Let’s take two examples—one for a car loan of ₹5,00,000 and another for a bike loan of ₹1,00,000. Both for 5 years.
| Loan Type | Loan Amount | Interest Rate | Tenure | EMI (Approx) | Total Interest | Total Payment |
|---|---|---|---|---|---|---|
| Car Loan | ₹5,00,000 | 9% | 5 Years | ₹10,378 | ₹2,22,680 | ₹7,22,680 |
| Bike Loan | ₹1,00,000 | 11% | 5 Years | ₹2,174 | ₹30,440 | ₹1,30,440 |
From this table, you can see the car loan EMI is bigger in number but cheaper in terms of percentage cost. The bike loan EMI is small, but the interest rate makes it relatively expensive compared to the principal amount.
Salary Requirement
Banks usually check your monthly income before approving the loan. For car loans, most banks prefer a minimum salary of ₹20,000 to ₹25,000 per month, while for bike loans, even ₹10,000 to ₹12,000 salary can be enough in smaller towns and with NBFCs. This makes bike loans easier to qualify for if your income is limited.
Which Loan is More Beneficial?
If you look at pure numbers, car loans are more affordable because of lower interest rates. But since the amount is bigger, the EMI burden is also heavier. Bike loans are easier to get and lighter on the pocket in monthly terms, but percentage-wise, they cost more in interest.
So the “better” option depends on your need. If you earn well and can handle a bigger EMI, a car loan gives you more value for money. But if your income is lower and you just need quick mobility, a bike loan is more practical.
Conclusion
Car loans come with lower interest rates and better long-term value, while bike loans are easier to get with lower salary requirements. For ₹5 lakh, a car loan EMI is higher but cheaper in terms of percentage cost. For ₹1 lakh, a bike loan is easy to manage but relatively more expensive in interest percentage. The right choice depends on your income, need, and comfort level with EMIs.
Disclaimer
This article is only for educational and general knowledge purposes. Interest rates and eligibility criteria differ from bank to bank and may change over time. Please check the latest details from your bank before applying for any loan.
