# Bike EMI Calculator

Created by Tibor Pal, PhD candidate and Madhu Raman
Reviewed by Wojciech Sas, PhD candidate and Steven Wooding
Last updated: Nov 29, 2021

Owning a bike 🏍️ is an important and proud moment for many, and our bike EMI calculator helps you plan your bike finance by calculating how much EMI you need to pay each month, thereby getting you one step closer to your dream! The bike loan EMI calculator also factors in the bike downpayment and the bike loan interest rate to calculate the EMI you need to pay.

As the world gets busier, commuting gets very tedious and cumbersome, and we often find ourselves unable to wade through the efforts that bus 🚌 or train travel 🚈 takes on a daily basis. Many a time, we aren't even able to find an autorickshaw at the time of our need and wish for a quicker means of personal transport. Fortunately, a car or a bike comes in very handy and tremendously helps us in our daily commute. Given the costs and the steadily rising inflation, most people naturally opt to buy a bike (or a scooter 🛵) as their first major investment.

## What is the meaning of EMI?

While taking any loan from a bank, such as a personal loan or a home loan or a bike loan, a calculation is done by the bank to spread out the loan amount over a period of time, and add interest to it. They arrive at a fixed monthly installment that we need to pay towards the loan. This installment comprising of the loan amount and the loan interest (for the bike in this case) is called an EMI – equated monthly installment.

The EMI calculation formula for the two-wheeler loan is based on the compound interest formula, and the amortization schedule is planned so that the interest you pay keeps decreasing each month, while the principal you pay keeps increasing each month until the loan balance becomes nil.

## How is the bike loan EMI calculated?

The EMI calculation formula for the two-wheeler loan is based on the compound interest formula, shown below:

$\LARGE {P = \frac{A \ \cdot \ i\ \cdot\ (1\ +\ i)^{t}}{(1\ +\ i)^{t}\ -\ 1}}$,

where:

• $P$ – Monthly payment amount;
• $A$ – Loan repayment amount;
• $i$ – Periodic interest rate; and
• $t$ – Number of periods.

For example, let's say the purchase price of your bike is ₹ 1,00,000 and you made a downpayment of ₹ 10,000 on your loan. So the effective loan amount will be ₹ 90,000. If the loan tenure is 24 months and the interest rate is 20.99%, the loan EMI will be calculated as follows:

$\large {EMI = \frac{90000\ \cdot \ \frac{0.2099}{12} \ \cdot \ (1\ +\ \frac{0.2099}{12})^{24}}{(1\ +\ \frac{0.2099}{12})^{24}\ -\ 1}}$

$\large {EMI = ₹\ 4624}$

## What is a two-wheeler loan?

When buying a bike, paying for it in full might be an expensive affair 💸 for many. To make such a huge purchase seem affordable, banks 🏦 provide auto loans to help us buy the vehicle 🚴 and repay the loan in installments. You may also choose to give a partial down payment for the bike loan. This bike EMI calculator lets you experiment with different downpayment and loan tenure values to check how much you need to pay for the loan.

Since the cost of a brand new bike 🚲 depends on a lot of factors such as size, cadence and speed, some people may also opt to purchase a second-hand bike on EMI. Either way, this bike EMI calculator will tell you the amount you need to set aside each month in your budget towards the two-wheeler loan.

## How does the bike EMI calculator work?

To use the bike EMI calculator, you'd need to provide the following values:

• The purchase price for your bike;
• The down payment for the bike loan (for example, if you are paying ₹ 5000 as the down payment for the bike, you may enter that value for this field);
• The bike loan interest rate, which the calculator uses to find the total interest is for the bike loan; and
• Tenure of the bike loan in months or years, based on which the final 2-wheeler EMI is calculated.

The bike installment calculator also provides the following details:

• Percentage of the total amount that you gave as the down payment for the bike loan;
• The remaining amount that you need as the loan; and
• The percentage of the total amount that's taken as the loan for the 2-wheeler on EMI.

Thus, whether you're going all-out and buying that latest bike which was just launched, or you prefer to buy a good-as-new 2nd hand bike on EMI, this two-wheeler EMI calculator will let you choose what part of your savings you want to withdraw for the down payment, and plan your debt 💰.

## Practical tips for managing the bike finance calculation

Given that we spend a significant portion of our hard-earned income 💵 on debt repayment, some practical tips for managing them would take you one step closer to being debt-free and on the path to becoming a millionaire! Here are a few pointers:

• Typically, if you purchase a vehicle around the festive season, you're likely to enjoy a greater discount, which would also help you decrease the amount you need to borrow;
• If you have different loan offers from various financial institutions, you could also compare the loans to see which gives you a better deal;
• Just like mortgage payments and rent, the two-wheeler EMI is calculated monthly, and is a recurring payment, so be sure to earmark the amount for it while planning your monthly budget;
• You may also use the debt avalanche or the debt snowball method to manage your loans, which will help you close out your debts sooner!

## FAQ

### Can I buy a second hand bike on EMI?

Yes! Most financial institutions offer two-wheeler loans, which are not restricted to new vehicles but also cover the purchase of second-hand bikes.

### What happens if bike EMI is not paid?

Typically, EMIs are due on a specific pre-determined date each month. If, for some reason, you're unable to make the EMI payment before the due date, you would get a notice and would have to give late payment charges, which include EMI bounce charges and bank charges.

### What is the minimum down payment for a bike?

Depending on the total cost and your repayment capacity, you may be asked to make a downpayment of 15-30% of the total value. After adjusting this, the bike EMI is calculated on the remaining amount.

### What is zero down payment financing?

Zero down payment financing is a payment facility wherein the financial institution pays the entire cost of your product and does not require you to pay anything upfront. Typically, you need to make a downpayment of 15-30% of the bike's purchase price and pay the rest via EMIs, but in the case of zero down payment financing, 100% of the bike's cost is loaned, and you need to pay it back via EMIs.

Tibor Pal, PhD candidate and Madhu Raman
Bike loan inputs
Purchase price of the bike
Down payment
Down payment percentage
%
Amount you need
Tenure
mos
Interest rate
%
Payment summary
Display...
chart of balances
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