The Future of Two-Wheeler Loans: Trends and Predictions

The Future of Two-Wheeler Loans: Trends and Predictions

Loans by Team Drivio | 20 Apr 2024

Check out these future trends and predictions for motorcycle loan industry. Bike owners will significantly benefit from flexible loans, lower interest rates, customised loan recommendations, and risk-based pricing with the advancement of AI and analytics.

Do you know that as much as 75% of motorcycle owners in India fund their purchases through two-wheeler loans? Since motorcycles are the most preferred mode of commuting in the country, reputed banks and NBFCs are coming up with affordable financing options. How about purchasing a new motorcycle to ditch congestion and ease up your navigation around the city? 

While motorcycle loans are affordable, you must be interested in future two-wheeler loans trends predictions. For instance, electric bikes are currently gaining popularity, and buyers are benefitting from government subsidies on their purchases. 

Likewise, the luxury motorcycle segment has also gained traction in terms of sales. Reputed banks are financing superbikes at lower interest rates compared to affordable ones.

In this guide, let’s explore some realistic predictions for motorcycle loan industry as we take you through the future trends.

7 Genuine Predictions for Motorcycle Loan Industry

While 60% of motorcycle loans come from banks, NBFCs finance the remaining 40%, which is a substantial amount. Statistics reveal that the Indian two-wheeler loan market is likely to be a $12.3 billion industry by 2025, growing at an annual compounded rate of 11%. Evidently, the future trends in the industry point toward remarkable growth.

Now, let’s have a look at the top future two-wheeler loans trends predictions.

1. Special loans for electric bikes

 Electric two-wheelers are gaining popularity due to the zero carbon footprint they leave. Particularly, the sale of EVs in India picked up pace after 2021, and the trend continues to grow strong. A report from the ICRA reveals that the electric two-wheeler market is likely to witness a growth between 8% and 10% every year. 

Reputed banks and NBFCs have introduced specialised loan schemes tailored for the purchase of EVs. These schemes often come with incentives like:

  • Extended repayment periods
  • Lower rates of interest
  • Minimal processing fee

Moreover, the government offers tax incentives to EV owners, which can help you make further savings. In the coming years, creditors are likely to roll out more buyer-friendly features through their loans.

2. Lower interest rates for the luxury motorcycle segment

In India, the demand for superbikes continues to rise, as evident from the sales figures. To make these models accessible, reputed lenders are offering loans at reduced interest rates. Considering the higher purchase price of luxury bikes, most owners reach out to banks and NBFCs for loans. 

Some of the top lenders sanction two-wheeler loans up to INR 25 lakhs for high-end models.  Besides, financial assistance is also available for purchasing accessories for superbikes. 

3. Subsidies from the government

Beyond affordable loans for electric bikes, you can also take advantage of government subsidies on these vehicles. The EMPS 2024 program offers a subsidy of INR 10,000 on the purchase of electric two-wheelers. Naturally, owners would be looking forward to capitalising on these perks from the government.

4. Digital loan application

Digitization has significantly shaped the current trends of the two-wheeler loan industry. Instant loan approval, digital sanctioning of loans with minimal paperwork, and paperless documentation processes are already transforming the industry. Banks and NBFCs are leveraging digital loan application platforms to ensure a seamless and user-friendly borrowing journey.

On digital platforms, applicants can submit their loan requests, upload necessary documents, and track the status of their applications online. With the integration of e-signatures and digital verification of documents, a streamlined process enhances your overall experience. 

In the coming years, the integration of AI and Blockchain in the digital loan application process will further enhance the mechanism. Incorporating AI, banks, and NBFCs will offer personalised loan recommendations to borrowers.

5. Loan verification using Blockchains

The Blockchain technology is already transforming several industries, particularly finance. The use of blockchain to verify loan documentation is likely to be one of the most prominent future trends. Lenders will leverage the immutable ledger system of blockchain to verify information about borrowers, check their credit history, and scrutinise information about asset ownership without having any intermediaries involved.

The use of blockchain in loan verification will reduce paperwork and mitigate the risk of fraudulent activities. It will also pacify the loan approval process. 

6. Risk-based pricing

 Risk-based pricing is a strategic approach that lenders use to determine the rates and terms of loans for borrowers based on their risk profile and creditworthiness. While some banks use smart algorithms to determine the loan-repayment capabilities of borrowers, risk-based pricing for motorcycle loans will continue to be a major trend.

 Financial institutions analyse various factors like credit scores, level of income, stability of employment, and debt-to-income ratios to evaluate the risk associated with each customer. Borrowers with higher credit scores and lower risk profiles can qualify for lower interest rates and more favourable loan terms.

With advancements in data analytics, lenders can benefit from enhanced accuracy in risk assessment. Thus, they will be better poised to make informed lending decisions, offering competitive pricing based on individual risk profiles.

7. Customised two-wheeler loans

 The future of two-wheeler loans lies in personalised loan products. Established banks and NBFCs will be customising these offers to meet the diverse needs of the borrowers. For instance, some lenders are already offering adequate flexibility with loan terms, repayment options, and interest rates.

Customisation extends beyond traditional loan structures, with options like step-up EMIs, balloon payments, and variable interest rates gaining popularity. This trend is likely to continue in the future, catering to specific preferences of customers and enhancing accessibility to financing.

End Note

Ongoing technological developments are likely to significantly shape future two-wheeler loans trends predictions. The industry is proactively adapting to the evolving needs of bike owners, offering personalised loans for electric bikes and flexible loan terms.

With further innovation in technology, the two-wheeler loan industry is set to witness remarkable progress in the coming years. Make sure to prioritise these future trends as you approach one of the reputed lenders for your two-wheeler loan.