Commercial vehicles play a crucial role in the transport and logistics sector. They help in the logistics development and trade across various regions in India. Lending for the financing of commercial vehicles can help company owners launch novel and distinctive projects in the transportation industry. Through this blog, let’s examine the many nuances of commercial car loans in India. In addition, we will go into more detail about the requirements for eligibility, the various paperwork procedures, the different kinds of commercial loans, and their characteristics and advantages.
Understanding Commercial Vehicle Loans
Commercial Vehicle Financing is available for self-employed individuals, trusts, partnerships, and organisations in need of funds. These loans cater to various vehicles like buses, taxis, tankers, tippers, and lorries, making them the most common type of loan in the transport sector. When applying for Commercial Vehicle Financing, it’s important to consider different interest rates as they can vary. Lenders assess multiple factors before finalising loans for the borrower’s profile.
Eligibility Criteria
The eligibility criteria for commercial vehicle financing can vary. However, most banks need applicants to fulfil this criterion and typically include:
- Age: Applicants should generally be between 21 to 65 years old.
- Proof Of Income: Individuals applying for commercial vehicle financing loans should provide proof of income through bank statements, IT returns and more.
- Credit History: Lenders may assess the applicant’s credit score in a commercial vehicle loan.
- Vehicle Information: The vehicle that the borrower wants to purchase should also meet certain criteria set by the lender. Such criteria may include age, income, etc.
- Collateral: Depending on the lender’s policies, collateral or a down payment may be required to secure the loan.
- Legal Compliance: Applicants need to complete legal requirements to own and operate commercial vehicles, including permits, licences, and insurance.
Features Of Commercial Vehicle Loans
Take a look at the features of commercial vehicle financing to understand the process in detail:-
- Affordability is a stand-out feature in commercial vehicle loans. Banks offer competitive interest rates for applicants, thereby, making it easier for many to apply for the loans.
- The entire sanction and approval is faster in relation to other personal loans. The process also requires minimal documentation.
- Most of the banks in India provide commercial vehicle financing loans at impressive rates, making it an attractive option to start a new transport business.
- Additionally, banks also offer customised assistance for the loan procedure. Assistance then enables a dedicated relationship between the bank manager and the customer.
- It takes then seven days for the loan to get disbursed after completing the document submission.
Commercial Vehicle Loans: Types And Uses
Commercial loans are accessible for a diverse range of commercial vehicles utilised across various locations to fulfil different purposes. These loans are categorised into three main types based on the vehicles they finance.
- New Commercial Vehicle Loan: Designed for purchasing brand-new commercial vehicles for business purposes, such as tippers, tankers, and trucks.
- Used Commercial Vehicle Loan: Tailored for acquiring pre-owned commercial vehicles from various makes, often offering up to 90% funding based on vehicle value or depreciation grid value.
- Balance Transfer: Refers to transferring an existing commercial loan to a new lender, typically offering quicker processing and potentially lower interest rates.
- Top-Up Loan: Allows borrowers who already have a commercial loan to obtain additional financing for their business needs.
Who Can Avail Commercial Loans?
Lenders extend commercial vehicle loans to a wide range of customers, catering to diverse business requirements. Eligible applicants encompass individuals, first-time purchasers, small to large fleet operators, proprietorship and partnership firms, public and private limited companies, trusts, educational institutions, as well as captive clients and transporters.
Benefits Of Commercial Vehicle Loans
While searching for vehicle transport services near me, you would be confused about its benefits. Here are some key features which help borrowers expand their diverse range of fleets and make informed decisions:
- Adaptable Repayment Tenure: Usually up to five years, with reasonable interest payments.
- Multiple Financing: Financing for many vehicles, such as tippers, trucks, buses, etc., helps businesses grow.
- Simple Processing: A 4-to 5-day turnaround time is offered for a streamlined application procedure.
- Simple Documentation: There is no need for in-person meetings when necessary documentation may be submitted online.
- No Credit-Score Compulsion: Approval is possible even with a low or no credit score.
- Caters to Multiple Needs: Offers financing for new and used vehicles, top-ups, and refinancing.
- Customised Solutions: Tailored schemes based on vehicle type and borrower’s financial capability.
Understanding Interest Rates
Interest rates on loans for commercial vehicles might vary throughout institutions. Based on variables including the car type and the borrower’s profile, lenders set the interest rate. The particular interest rate is decided by the bank or lending organisation after reviewing the documents and evaluating the borrower. These rates are typically between 10% and 15% every year.
In conclusion, commercial vehicle loans offer flexibility and convenience to borrowers, catering to diverse needs and business objectives. With competitive interest rates and tailored solutions, they remain a preferred choice for those seeking to acquire or expand their commercial vehicle fleet.
