Getting a loan for your commercial vehicle is very easy as various financial organization has ease their terms and condition. If you meet the required parameter then you can choose from the multiple options available in the market. After paying the required down payment you can have your vehicle with minimum paperwork. Most of the prominent banks in India offer commercial vehicle loan with a hassle free process and additional benefits. You can get the loan on easy EMI that can be monthly, quarterly or yearly.
Commercial Vehicle Loan Interest RatesUpdated on 29 Jan 2019
|Eligible customers||Individuals, proprietorships, companies, partnership firms, trusts and societies
|Eligible vehicles||Buses, trucks, tippers, trailers, tankers and other light & small commercial vehicles
|Age Limit||Minimum- 24 Maximum- 65
|Quantum||Minimum- Rs.1 lakh Maximum- Rs.5 crore
|Margin||Up to 100% of the chassis
|Approval Duration||2 to 5 days depending on customer’s profile
|Interest Rate||10% p.a. to 15% p.a.
|Processing Fee||2%-4% of the loan amount
|Insurance||Comprehensive insurance at borrower’s cost for entire loan tenure
|Repayment period||2-5 years
|Prepayment||Any time after 6 months with up to 5% of the outstanding amount
Commercial VehicleLoan - Checklist to Follow While Applying for it
Getting a Commercial Vehicle loan is easy through the LoanQubes.com website. You can secure the most appropriate car financing product within a matter of few minutes. The steps involved in the car loan application process are as follows:
- Visit the home page of the LoanQubes.com website and select the Car Loan product from the drop down menu. The page that shows up will have a list of car loan offerings from various banks.
- You can compare the loans and select one that suits your needs. You should check certain parameters such as the amount of loan available, eligibility, interest rate, etc.
- Once you have decided on the loan, click on the “Apply Now” button to initiate the application process.
- Once the application is submitted, you will receive an e-approval form instantly. Your application will also be sent to the bank that you have chosen to take the loan from.
- You will soon receive a call from the bank. You can track your application through email notifications or SMS.
- The bank will validate your eligibility and submitted forms and disburse the loan accordingly.
Commercial Vehicle Loan: Features
- You can get a commercial vehicle loan at a low interest if your profile matches with the criteria put forwarded by the lenders.
- The processing time of a commercial vehicle loan is fast with easy documentation and approval.
- Most of the prominent banks in India provide commercial vehicle loan at an affordable rate of interest without any security.
- Some of the banks assign a personal relationship manager from starting till procurement of the vehicle. He/she will do all documentation and address every issue related to the loan.
- Once all required documents are submitted, it takes around 7 days for the disbursal of the loan amount.
Types of Commercial Vehicle Loan
Commercial loans can be availed for a variety of commercial vehicles which are used at different places to serve various purposes. Based on the type of vehicles these loans are sought for, commercial vehicle finance is differentiated in three broad categories namely:
- New commercial vehicle loan This type of commercial vehicle loan is provided to the customers for the purchase of new commercial vehicles for business purpose. Banks offer up to 100% funding on the chassis or base frame value of the vehicle. Some of the banks provide additional funding for the body construction of the vehicles in selective cases based on the borrower’s profile.
- Old commercial vehicle loan Old or used commercial vehicle loan are those loans which are offered to purchase all makes of pre-owned or used commercial vehicles. Under this loan, borrowers can expect to get finance against old vehicles which are up to 15 years old. Most of the banks provide up to 90% funding on the used vehicle’s value or depreciation grid value.
- Commercial vehicle refinancing Under commercial vehicle refinancing, banks either offer loan on an existing vehicle which is free of loan or take over an existing commercial vehicle loan and provide additional finance for it based on eligibility. While some borrowers can reduce the monthly EMIs of their existing loan and free up some cash by refinancing an existing loan at lower interest rates, some others can get direct finance on their free vehicles to meet the working capital needs.
Who Can Avail Commercial Car Loan?
Banks and other lenders offer commercial car loan to a broad array of customers to meet their business needs. In other words, this type of vehicle loan can be availed by various segments of customers having diverse profiles. Here is the list of the consumers considered to be eligible for this loan:
- First-time users and buyers
- Small, medium and large-sized fleet owners
- Proprietorship firms and Partnership firms
- Public Limited & Private Limited Companies
- Trusts and societies
- Schools and colleges
- Captive customers and transporters
Salaried and self-employed individuals can co-apply for a commercial vehicle loan with blood relatives or family members. On the other hand, the partners in partnership firms and the directors in private limited companies can jointly apply for this loan.
Note: Sometimes, banks or financial organisations offer special schemes for first-time buyers and fleet operators/owners.
Commercial Vehicle Loan: Benefits
Commercial vehicle loan stands out to be the most preferred option for borrowers who are either intending to buy their first commercial vehicle or planning to add a new vehicle to their existing fleet of commercial cars due to the plethora of benefits that it offers. Some of the outstanding benefits of this loan are as follows:
- Flexible repayment tenure- Usually, the repayment tenure offered in commercial car loan is up to 5 years. This ensures low EMI amount to the borrowers enabling them to pay off the EMIs without any undue financial burden.
- Multiple vehicle financing- Whether you are an individual borrower or a fleet owner, you can get finance for a variety of vehicles such as tippers, trucks, buses, trailers, tankers, and other small and light commercial vehicles to grow your business.
- Easy processing- The process of applying for a commercial vehicle loan is easy, fast and convenient. After the submission of all the required documents, banks usually take 4-5 days to process a new or used vehicle loan application.
- Simple documentation- Commercial vehicle loans come with a hassle-free and quick documentation process. The users can easily upload all the mandated documents online without visiting the bank directly.
- No credit-score compulsion– Unlikely other loans, commercial vehicle loans don’t require any existing credit score. Borrowers having low or even zero credit score can avail a commercial vehicle loan with ease.
- Caters to multiple needs: The loan schemes are designed to cater to the borrowers’ diverse requirements including new and used vehicle financing, top up on existing loan and refinancing of loans/vehicles for working capital.
- Customised solutions: In order to meet the specific requirements of the customers, every commercial vehicle loan scheme is customised according to the vehicle type, loan duration and financial ability of each individual borrower.
Commercial Car Loan Documentation
- Duly filled application form with attached photograph
- 2 passport-size photographs
- Cheque for processing fee
- Age proof– Aadhaar Card/PAN Card/Voter’s ID card/Driving License/Passport (Any one)
- Identity proof– Aadhaar Card/Voter’s ID card/Driving License/Passport (Any one)
- Residence proof– Rental agreement/Voter’s ID Card/Passport/Ration card/Tel bill or Elec. Bill/Trade License/ Sales Tax Certificate (Any one)
- Signature verification proof-Driving License/PAN Card/Registered Sale Deed/Govt. ID Card(For Govt. employees) (Any one)
- Last 3 months Salary Slips
- Latest 6 months bank statement
- Form No.16
- Updated ITR for last 2 years
- Photocopy of official ID
- Valid documents to prove relevant experience (In case of first-time buyers)
Other Documents (As applicable)
- Existing vehicle ownership proof
- Vehicle details & valuation report
- Insurance and RC copy of vehicle
- Fleet list details (In case of small, medium, and large fleet operators/owners)
- Trade references (In case of first-time buyers, fleet operators/owners & experienced borrowers)
- Property ownership proof (In case of farmers)
- Proprietorship decl., partnership deed,(MOA/AOA), board resolution & 2 years audited financials (In case of Private/Limited companies, partnership firms, trusts & societies)
- Loan repayment track (if any)
Eligibility Criteria for Commercial Vehicle Loan
For new commercial vehicles
- Applicant’s age should be above 24 years during loan commencement and within 65 years at the time of loan maturity.
- Salaried borrowers should have more than 2 years of employment stability and self-employed individuals must have at least 2 years of business experience.
- Private/Limited companies, partnership firms, trusts, societies and associations must be in existence for minimum 2 years.
- Fleet operators and other existing vehicle owners require to have 1 to 3 years of vehicle ownership proof of one or two commercial vehicles.
- Private/Limited companies, partnership firms, trusts & societies Companies need to provide 2 years of audited financials.
- Internal/external guarantor needed sometimes in case of individuals, first-time buyers and fleet operators/owners.
- The customers need to have minimum residential stability of 2 years. *(Borrowers with lesser stability are subjected to certain terms and conditions).
For old commercial vehicles
Borrowers applying for a commercial car loan for old vehicles need to fulfil the following criteria along with the basic ones:
- Customers need to have relevant experience of 3 to 5 years depending on individual profile.
- Minimum 1 year of ownership of at least 2 vehicles.
- At least 1 year repayment track of commercial vehicles
- Construction equipment loan or any other type of loan (Up to 50% of a new loan request based on the category of the customer).
Commercial Vehicle Loan Approval - Steps to Get the Loan Approved Faster
When you want to receive funds to purchase the new or used car that you have been eyeing for a while, it is better that you opt for a pre-approved loan. In order to avail such a loan, you can follow a few steps to quickly receive the required funds.
- Check Your Credit Report
There are a number of organisations that offer individuals the facility to check their credit report without any charges once every year. You can check your credit report to verify your standing in terms of credit and resolve the errors present such as late payment, collection, incorrect credit limit, etc. If a single error is left unresolved, it can negatively impact your credit score and cause hindrance in getting your Commercial Vehicle loan approved. By checking your credit report, you can get an idea of how your application will be treated by the lenders and will, therefore, help you take the necessary steps in advance.
- Pay Your Bills on Time
In order to avail a loan to purchase your dream Commercial Vehicle, you must have a minimum monthly pre-tax income and a manageable debt-to-income ratio (DTI). While it is usually not possible to change one’s income, you can improve your DTI by clearing off all your pending credit card debts.
To create a better credit profile, you should always pay your bills on time. If that is not possible then you can make timely payment of your bills at least 6 months prior to the loan application. If you pay your bills on time, it assures the lender that you will also repay the Equated Monthly Installments (EMIs) on time. This, in turn, will help you secure a loan easily.
- Look for Your Options
There are multiple options available in the market through which you can get a loan to purchase your new or used Commercial Vehicle . You should check the car loan interest rates of different banks and car financing firms in order to find the one that fits your needs.
- Borrow as Less as Possible
By paying a larger amount upfront as down payment, you can reduce the sum that you will have to borrow in order to match the price tag of the Commercial Vehicle you have chosen. If you borrow a lesser amount, you will be in a better position to repay your loan quickly since a smaller loan amount means smaller EMIs or a shorter loan tenure. Additionally, the amount that you will have to pay to your bank or car financing organisation as interest will also reduce.
- Be Sure to Choose a Plan That Fits Your Budget
The repayment capability of an applicant greatly impacts the approval of a loan that he or she has applied for. As you decide to get a loan to purchase the Commercial Vehicle that you have always wanted, you should make sure that you choose a scheme that you can afford. If you are already paying EMIs for other loans that you have availed, you should ensure that you can also pay the EMI of the car loan that you choose.
- Pay Attention to the Terms of the Loan
A Commercial Vehicle loan that has low monthly EMIs but consists of a longer tenure might not be viable for you. Before you finalise your financing scheme, you should always try to opt for a plan that carries the lowest interest rate and the shortest loan tenure as possible. Avoid being tricked into an expensive payment situation by ensuring that the loan terms are conclusive.
- Get a Commercial Vehicle Insurance With Complete Coverage
While offering a loan, the main concern of banks and NBFCs is not to incur any losses. Therefore, having a full-cover insurance is a requirement for many organisations before sanctioning a Commercial Vehicle loan as it helps recover the balance debt in case there is an accident wherein the borrower is at fault. Additionally, you should also have a Guaranteed Auto Protection (GAP) insurance which recovers the difference amount between the insurance loss of your Commercial Vehicle and the outstanding loan.
Commercial Vehicle Loan Reviews