Finance

How To Get A Commercial Vehicle Loan In India?

Commercial Vehicle Loans are taken for purchasing any type of commercial vehicle, depending on your business requirements. You can get a commercial vehicle loan when you are a self-employed individual, partnerships or organizations, etc., for buying the vehicle for their business. It can be anything like trucks, buses, tankers, light and small commercial vehicles. 

Commercial Vehicle Loan Process:

Here is the step by step process that you have to follow for getting a commercial vehicle loan in India:

  • Research for the best commercial vehicle loan options available based on the financial provider, interest rate, prepayment policies, and other essential factors that you think are crucial
  • Check your eligibility requirement from the financial provider’s website.
  • Fill in the application form available, which will be available online.
  • Submit the requested documents according to your financial provider’s request.
  • Provide collateral (If asked for by your financial provider)
  • Wait for your financial provider to evaluate your eligibility criteria and documents.
  • Loan approval
  • Disbursal

Once your loan is accepted, you will get the money disbursed in your bank account for 4 to 5 days. It will change depending upon the financial provider you choose and your eligibility.

Why would you need a commercial vehicle loan?

When you require finance for a commercial vehicle, you might have any reason like

  • Increasing productivity of your business
  • Transporting your goods
  • If you want to provide a delivery facility for your customers
  • When you are a travel agent or have some related businesses
  • Farm equipment or constructing vehicles

Types of commercial vehicle loans:

There are two types of commercial vehicle loans like

New Commercial Vehicle Loan:

Go for a new commercial vehicle loan when you plan to buy a new vehicle for your business. Most banks and NBFCs offer total funding for the base frame value for the vehicle you are purchasing. Some even offer additional funding for the body construction depending upon your credit score and other criteria. 

Used Commercial Vehicle Loan:

The used commercial vehicle loan is used for buying old and used vehicles for utilizing it for your business requirements. You can get this loan for vehicle’s which are not more than 15 years old. In most banks and NBFCs, the funding you will get up to 90% of the vehicle’s devaluation rate.

Who can get a commercial vehicle loan?

Both the banks and NBFCs offer commercial vehicle finance for customers depending on their business requirements. 

Here is a list of customers who are eligible for opting for this loan:

  • Self-Employed Individuals
  • Small, medium and large convoy owners
  • Proprietors or partnership businesses
  • Trusts
  • Educational institutions
  • Travels & transport agencies
  • Public & private limited companies

Suppose you are a self-employed individual who wants a commercial vehicle loan. In that case, you can apply with a guarantor and get the loan.

Advantages of a commercial vehicle loan:

Commercial vehicle loans are the most preferred option for borrowers. When you are buying your first vehicle for business or are planning to add one more vehicle to your fleet. The most important advantages of a commercial vehicle loan are:

Competitive Interest Rates:

All the financial institutions offer competitive interest rates for a commercial vehicle loan. Depending upon your credit score, the interest rates will vary. 

Flexible Repayment Tenure:

Typically, the repayment tenure for the commercial vehicle loan is up to 10 years. As the tenure is long, it will have low EMIs that will not burden the applicant’s financial well being. 

Multi-Vehicle Financing:

You can get financing for any type of vehicles like trucks, buses, tankers, tippers, and small and large commercial vehicles, which will help suit your business. 

Quick & Easy Processing:

When it comes to commercial vehicle loans, it has easy approval and quick disbursal. Mainly within a few days of document submission, your new or used commercial vehicle loan will be approved. 

Minimal Documentation:

Commercial vehicle loans are considered hassle-free when it comes to their documentation process. Most of the banks and NBFCs have made the application and documentation online. Even if you go directly, you will have a minimal documentation process.

No Credit-Score Necessary:

Unlike other loans, these don’t require any credit score ratings. Even people with low or nil credit scores can benefit from the commercial vehicle loan without any problem. 

Customized Solutions:

Each individual will need a different type of vehicle, and their requirements for loans might vary. So the bank or NBFC will customize a loan and its tenure based on the financial ability of each individual.

Commercial Vehicle Loan – Eligibility:

For New Commercial Vehicles:

  • Suppose you are a self-employed or salaried individual. In that case, you should have at least 2 years of experience in your work or business.
  • When you are a partnership firm, trust or association, you must exist for 2 years. 
  • Existing travels or fleets owners must have 1 – 3 years of vehicle ownership and proof about their current vehicle.
  • If anyone can guarantee you, then even as a first-timer, you will be eligible for the loan.
  • You should be able to provide audit documents of your business for 2 years. 

For Used Commercial Vehicles:

  • Borrowers should own at least two vehicles for a minimum of a year.
  • Suppose you are looking for a used commercial vehicle loan. In that case, you should have at least 3 – 5 years of experience, depending upon your requirements.
  • Documentation regarding your current loans is essential to inform the lender about your existing debts. 

Documentation for Commercial Vehicle Loan:

When you are opting for a commercial vehicle loan, you should provide the following documents for processing your loan:

  • Commercial vehicle loan application form with your passport size photograph attached.
  • 2 additional passport size photographs
  • A cheque for submitting your processing fee (if applicable)
  • KYC documents
  • Age Proof – Aadhar card/Voter’s ID/ PAN card/ Driving License (Any One of these)
  • ID Proof – Aadhar card/Voter’s ID/ PAN card/ Driving License (Any One of these)
  • Resident Proof – Rental agreement/Voter’s ID/ Passport/ EB bill/ Telephone bill (Any one of these)
  • Signature Proof – PAN card/ Driving License/ Registered Sales Deed (Any one of these)
  • Income proof
  • Last 3 months payslip
  • Account statement for your bank for the past 6 months
  • Form 16
  • Updated ITR documents for at least 2 years
  • Photocopy of your official ID
  • Experience Proof
  • Other general documents like
  • Existing vehicle ownership deed
  • Vehicle details and valuation reports
  • RC book
  • Insurance copy
  • Details related to your business fleets (whether it is small, medium or large in size)
  • Trade references, if any
  • When you apply for farm vehicles, you should provide the property ownership deed
  • Partnership deeds, if any
  • If you already have a loan, you should provide a loan repayment track record

When you are looking for a commercial vehicle loan, this information will be of a lot of help. You can easily choose the best finance provider who can provide you with a customized loan that will suit your requirement.

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