Commercial vehicle plays a key role in the smooth operation of our daily life. Commercial vehicle loan is a type of financial assistance offered by banks or financial institutions to buy or procure any type of vehicle that meant to be used in business or commercial purposes. Commercial vehicle loans in India can be availed by organisations, trust or self-employed individuals.

Purpose of Commercial Loan

The cost of commercial vehicles is at the higher side in comparison to the non-commercial or personal vehicles. Further, the other expenses such as fee-related to the vehicle including registration, RTO charges and permit are also expensive. Hence, it is always wise to purchase commercial vehicles with the assistance of commercial vehicle finance. Commercial vehicle loans in India is offered by almost all the banks and the financial organisations and they come in affordable interest rates.

Features of Commercial Vehicle Loans

The commercial vehicle loans offered in India are feature packed. A few of the prime features of commercial vehicle loans include,

Commercial vehicle loans are affordable and can be availed in lower interest rates if you fulfil the criteria set by the lender

The documentation process of commercial vehicle loan is simple and straightforward

The evaluation and processing time of commercial vehicle loan is really quick

Commercial vehicle loan interest rates are affordable across most of the renowned lenders and banks in India. Further, they come without any security

Based on the lender or bank you are dealing with, you may also likely get a personal relationship manager, who will take care of the complete documentation process required to avail your commercial vehicle loan

The lenders usually take seven days to disburse the loan amount of commercial vehicle loans, if the documents are duly filled and submitted

What are Types of Commercial Vehicles Loans Offered in India?

Based on the type of vehicle and purpose, the commercial vehicle loans offered in India are categorised into three types.

New commercial vehicle loan

This category of loan offered to the applicant who is planning to buy a new vehicle for business or commercial use. Through new commercial vehicle loans, up to 100 per cent funds can be availed for chassis. Based on the equity of the borrower, some lenders also offer additional funds for the construction of the body.

Old commercial vehicle loan

This type of loan can be availed if you are purchasing any pre-owned commercial vehicle. However, the vehicle should not be more than 15 years old, to apply for an old commercial vehicle loan. Up to 90 per cent funding can be availed based on depreciation grid value of the vehicle.

Commercial vehicle refinancing

This type of loans offered to loan free existing commercial vehicle owners to meet their working capital.

Who is Eligible for Commercial Vehicle Loans?

Based on eligibility, lenders offer commercial vehicle loans to a broad range of customers, which includes

Private Limited companies

Public Limited companies

Partnership firms

Proprietorship firms

Schools and colleges

Societies and trusts

Transporters and fleet owners

Individuals

Further, self-employed and salaried persons can co-apply commercial vehicle loans along with blood relatives. Directors and partners of private limited or partnership firms can also jointly avail commercial vehicle loans.

Benefits of Commercial Vehicle Loan

Lenders offer an array of benefits to the borrowers of the commercial loans. If you are planning to buy your first commercial vehicle or add few vehicles to your existing fleet of business vehicles, the commercial vehicle loans should be your most preferred option. The plethora of benefits offered by commercial vehicle loans include:

Most of the lenders provide flexible repayment tenure of up to five years to the borrowers. This helps in minimizing the EMI burden

Offers financial assistance for multiple vehicles such as buses, trucks, tankers or trailers that needed to grow your business

Processing of availing commercial vehicle loan in simple, convenient and fast

Commercial vehicle loans can be availed with quick, simple and hassle-free documentation

Unlike various other loans, commercial vehicle loans are free of credit score compulsions

Commercial vehicles loans are flexible and customised to cater to the specific needs of the borrowers

List of Documents that are Required to Avail Commercial Vehicle Loans

The documentation process of commercial vehicle loan is hassle-free and required minimal documents to fulfil the eligibility criteria of the lenders. Below is the list of documents most of the banks and lenders evaluate while approving a commercial vehicle loan.

Two recent passport size photographs

Duly filled cheque for the processing fee of the loan

Duly filled commercial vehicle loan application form

List of KYC Documents

Proof document for age

Proof of identity

Proof of address and residence

Proof of signature verification

Proof for Income

Salary slips of last three months

Bank statement of last six months

Last two year’s ITR along with Form 16

Copy of your official ID

Proof of Experience

In case of the first-time owner, proof for relevant experience need to be submitted as suggested by your loan advisor

Other Documents

Proof towards ownership of the existing vehicle, if any

Details of the vehicle and valuation report

Copy of RC and Insurance of the vehicle

Details of fleet

Trade references

In the case of a farmer, proof of property ownership

MOA and AOA in case of institutional buyers

Audited financials for two years along with board resolutions, in case of institutional borrowers

Track of loan repayment, if any

What are the Eligibility Criteria Borrowers Need to Fulfil?

Based on the type of loan and lender, the eligibility criteria vary. Below is a list of eligibility criteria based on loan type.

Eligibility for New Commercial Vehicle Loans

The age of the applicant should be between 24 to 65 at the time of loan commencement and maturity

Salaried borrowers must have two years of job stability

Self-employed individuals must have two years of experience in business

For the institutional borrowers such as partnership firms or private limited companies must have two years of business existence

Existing vehicle and fleets owners must have one to three years of ownership proof of vehicles

Institutional buyers must submit two years of audited financials

In certain cases, borrowers may require an external or internal guarantor to avail commercial vehicle loans

The borrower must have two years of residential stability

Eligibility for Old Vehicle Loans

Based on personal equity, borrowers need to have three to five years of relevant experience set by the lender

Should own at least two vehicles for a year

Should submit one year of repayment track of commercial vehicle

Commercial Vehicle Loan: Key Aspects

As an informed borrower, you need to know and understand few of the vital aspects of commercial vehicle loan as listed below.

Process of application

The application process of availing commercial vehicle loan is online. The borrowers need to submit the online form along with the complete necessary documents

Approval procedure of Loan

Based on the received application and document, the lenders usually take two to three working days to check the eligibility and approve a commercial vehicle loan

Processing fee

The lenders usually charge a nominal processing fee on commercial vehicle loans. The processing fee can vary between 2 per cent to 4 per cent of the total loan amount based on the lender

Loan Margin or Amount

Based on the equity and profile of the borrower, the commercial vehicle finance can be up to 100 per cent of the vehicle chassis

Tenure of repayment

Majority of the banks and lenders offers flexible loan repayment tenure to the borrowers, which is helpful in keeping the burden of EMI low. Typically, the repayment tenure of commercial vehicle loan starts from six months and can be extended up to five years

Requirements of collaterals and security

Majority of the commercial vehicle loan comes without any security. However, based on the profile of the borrowers, sometimes lender may ask for co-applicants or guarantor

Clause of Pre-payment

In most of the commercial vehicle loans, the borrowers are allowed to prepay the loan post six months by submitting a 5 per cent of prepayment fee on the remaining loan amount.

Rate of Interest in Commercial Vehicle Loan

Commercial vehicle loan's rate of interest rates varies with the bank or lender you are dealing with. It is the lender who fixes the rate of interest based on the borrower and the type of vehicle being procured. Typically, interest rates of commercial vehicle loan vary between 10 to 15 per cent per annum. Further, 18 per cent of GST will be applicable to the service offered by your lender.

If you are looking out for a flexible and affordable commercial vehicle loan, Rubique should be your first choice. Availing a commercial loan via Rubique is quick, simple and convenient.