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Commercial Vehicle Loan

Commercial Vehicle Finance

Last Updated 30th Oct 2020

  • Commercial vehicle loans are offered for the purchase of vehicles with commercial use.
  • The loan can be availed for both new and used commercial vehicles.
  • Commercial vehicle loan interest rates begin from 8.00%.
  • The tenure for commercial vehicle loans can be up to 5 years.
  • Commercial vehicle finance can be availed online and offline.
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Commercial Vehicle Loans

Vehicles that are licensed to be used commercially for transporting goods and materials are called commercial vehicles. The need for commercial vehicles is growing day by day, and hence, more and more people are buying commercial vehicles. To make things easy, various leading loan providers offer the facility of commercial vehicle loans. This loan is generally offered to self-employed individuals, organizations, firms, trusts and so on.

The commercial vehicle loan can be used to buy both new and used vehicles. List of vehicles that can be purchased with this loan.

  • Small and light commercial vehicles
  • Medium and heavy commercial vehicles
  • Intermediate commercial vehicle
  • Trailers
  • Buses
  • Trailers
  • Customized commercial vehicles

Commercial Vehicle Loan Interest Rates

Some selective banks offer commercial vehicle finance. Needless to say that the commercial vehicle loan interest rates vary from providers to providers. The loan amount and the interest rates are decided after evaluating the profile of the applicant and the segment of the vehicle. Besides the varying interest rates, the banks charge different processing fees, documentation fees, loan cancellation fees and prepayment charges. The commercial vehicle loan interest rates start from 8.00%. However, the processing fee charged on commercial loans is upto 2%. You can prepay the loan before the end of the tenure by paying prepayment charges upto 5%. These charges may vary from bank to bank.

Features of Commercial Vehicle Loans

Commercial vehicle loans come with the following features.

  • Documentation, approval and processing of commercial loans are fast and hassle-free.
  • The loan amount is disbursed within seven days after documentation has been completed.
  • Most banks provide commercial vehicle finance without any security.
  • The tenure of commercial vehicle loans can go up to 5 years.
  • In contrast to other loans, commercial vehicle loans do not require an existing credit score.
  • The loan can be customized as per your specific requirements.

How To Apply For Commercial Vehicle Loan?

Making an application for a commercial vehicle loan is as effortless as its processing. You can apply for the loan in the following two methods.

  • Offline: By visiting the branch of the respective bank.
  • Online: By visiting the official website of the respective bank.

Offline or online, each method requires more or less the same steps. Here is the standard application process of the commercial vehicle loan. Note that additional steps may be required based on the lender.

  • Collect and fill up the application form with valid information.
  • If you do not hold an existing account at the bank, you will be required to complete the KYC process.
  • For the online process, you can take the option of e-KYC.
  • Submit all required documents.
  • Once the application has been made, verification takes place.
  • After a successful verification, if all looks well, the bank will confirm the application.
  • You will receive the loan amount via your account within 7 days.

Remember to decide the tenure, clarify the EMIs and other important factors while making the application.

Types of Commercial Vehicle Loans

Commercial vehicle loans can be obtained for various vehicles. Depending on the type of commercial vehicle, the commercial vehicle loan has been categorized into three different segments.

  • New commercial vehicle loan: As the name suggests, this one is for purchasing a new commercial vehicle. You can avail up to 100% of the actual value of the vehicle as a loan. A few banks provide additional fundings required for any construction of the vehicle body.
  • Used commercial vehicle loan: Used commercial vehicle loan is available for old or used vehicles. You can avail up to 90% of the funding for the vehicle as a loan. The used vehicle can be a maximum of 15 years old to be eligible for the loan.
  • Commercial vehicle refinancing: Commercial vehicle refinancing can be a loan on an existing vehicle or a takeover on an existing loan. You can get direct finance on your existing commercial vehicle to help you with your capital requirement. Moreover, by opting a refinancing on a lower interest rate than your existing loan, you can reduce your EMI burden.

Used Commercial vehicle loan Benefits

Many people are now opting for used commercials as they have many perks.

  • The used commercial vehicle comes with a lower price tag. You can get your job done without making a big burden on your wallet.
  • You can get up to 90% funding for the used vehicle as a loan.
  • Loans are available for old vehicles up to 15 years old.

Eligibility Criteria for Commercial Vehicle Loan

Eligibility criteria are different for the new and used commercial vehicles. Below is the list of eligibility criteria for all commercial vehicle loans.

Eligibility criteria for new commercial vehicles

The eligibility criteria for new commercial vehicles is listed as follows:

  • Minimum 2 years of employment experience for employed individuals
  • Minimum 2 years of business experience for self-employed individuals.
  • Minimum 2 years of existence for private companies, limited companies, trusts, associations, partnership and firms.
  • Minimum 2 years of residential stability.
  • Internal or external guarantor required for fleet owners, fleet operators, individuals and first-time buyers.

Eligibility criteria for used commercial vehicles

The eligibility criteria for used commercial vehicles is listed as follows:

  • 3 to 5 years of experience in the relevant field.
  • Minimum ownership of at least two vehicles for one year.
  • Minimum one year of repayment history of a commercial vehicle.

Documents Required For Commercial Vehicle Loan

Below laid out is the list of documents required for commercial vehicle loans.

  • Proof of identity: Voter ID card, Aadhaar card, Passport or Driving license.
  • Proof of address: Voter ID card, Aadhaar card, Passport, the electric bill, telephone bill or certificate of sales tax.
  • Proof of age: Voter ID card, Aadhaar card, PAN card, Passport or Driving license.
  • Proof of signature verification: PAN card, Driving license, Government issued ID or registered sale deed.
  • Income proof: Latest three salary slips, Latest six bank statements, Form 16, ITR of last two years (updated)
  • Others: Experience proof, Ownership proof for existing vehicle, Vehicle details , Valuation report of a vehicle, Fleet list, Partnership deed, Trade reference, Loan repayment track

FAQs

What is a commercial vehicle?

The term commercial vehicle refers to the vehicles used commercially. Basically, a vehicle that has been licensed to use in transporting goods or other materials is called a commercial vehicle.

Is my truck a commercial vehicle?

If you are using your truck commercially for transporting any goods or material, only then your truck can be called a commercial vehicle.

What is the difference between commercial and passenger vehicles?

Commercial vehicles are used to transport goods or materials; whereas, passenger vehicles are to carry passengers. The two differ based on size and height as well.

Can I avail a commercial vehicle loan if I do not meet the eligibility criteria?

No, you will not be able to avail a commercial vehicle loan if you do not meet the eligibility criteria. However, it will depend on the lender as some lenders may relax the terms.


*Terms and conditions apply. Credit at sole discretion of lender subject to credit appraisal, eligibility check, rates, charges and terms. Information displayed is indicative and from collected from public sources. Read More