Commercial Vehicle loans: Benefits, types, process, eligibility and other details

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By Priya SinghUpdated On: 21-Mar-2023 01:31 PM

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ByPriya Singh |Updated On: 21-Mar-2023 01:31 PM

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A Commercial Vehicle Loan is an unsecured loan that helps borrowers, who are typically self-employed persons, corporations, partnership businesses, organizations, and so on, purchase any commercial vehicle required for their transportation business or any other business. Because no collateral is required, you can obtain a commercial vehicle loan online at competitive interest rates and flexible repayment terms.

What do you mean by Commercial Vehicle loans?

Loans offered to borrowers for the purchase of commercial vehicles are known as commercial vehicle loans. These Automobile loans are available to persons in the transportation industry. A commercial vehicle loan can be used to finance the purchase of buses, trucks, tippers, tankers, and other light and small commercial vehicles.

Who Is Eligible for Commercial Vehicle Loans?

Banks and other lenders provide commercial automobile loans to a wide range of customers in order to satisfy their business demands. In other words, this form of automobile loan is available to a wide range of customers with varying profiles. The following consumers are thought to be eligible for this loan:

• Individuals
• Buyers and consumers who are making their first purchase
• Owners of small, medium, and big fleets
• Partnerships and sole proprietorships
• Public Limited Companies and Private Limited Companies
• Societies and trusts
• Colleges and universities
• Transporters
• Those who are working or self-employed can apply for a commercial vehicle loan alongside blood relatives or family members.
• Nonetheless, partners in partnership firms and directors in private limited corporations can apply for this credit jointly.

It should be noted that banks and financial institutions occasionally offer special discounts for first-time buyers and fleet owners.

What are the Advantages of a Commercial Vehicle Loan?

Commercial vehicle loans are the preferred option for borrowers looking to purchase their first commercial vehicle or add a new vehicle to their existing fleet of commercial vehicles due to the numerous benefits they bring. Some of the merits of commercial vehicle loans are as follows:

Customized solutions- To fulfil the specific needs of consumers, each commercial vehicle loan scheme is tailored to the vehicle type, loan period, and financial capacity of each individual borrower.

Documentation- Commercial vehicle loans have a simple and rapid paperwork process. Users can quickly upload all required documents online without having to visit the bank.

No Cibil score Required- Commercial vehicle loans, unlike other types of loans, do not require any prior credit history. Borrowers with poor or no credit can easily obtain a business car loan.

Flexible payback terms- Typically, loans have repayment terms of up to 5 years. This guarantees that borrowers have minimal EMI amounts, allowing them to pay off their EMIs without undue financial difficulties.

Multiple vehicle funding- You can obtain finance for a variety of vehicles to support the growth of your company, whether you are a single borrower or a fleet owner. You can get funding for all types of vehicles such as trucks, buses, tractors, and other small and light commercial vehicles.

Simple application process- Applying for a business vehicle loan is simple, quick, and convenient. Banks typically take 4-5 days to process a new or used vehicle loan application after all relevant documents are submitted.

The lending schemes are designed to meet the borrowers' different demands, including new and used truck financing, top-ups on current loans, and refinancing of loans/vehicles for working capital.

What are the types of Commercial Vehicle Loans?

Commercial loans are available for a wide range of commercial vehicles that are employed in diverse locations for a number of reasons. Commercial vehicle finance is classified into three basic groups based on the type of vehicle for which these loans are sought:

1. New commercial vehicle loan: This form of commercial vehicle loan is given to customers to purchase new commercial vehicles for commercial use. Banks will lend up to 100% of the vehicle's chassis or base frame value. Several banks provide additional funding for vehicle body building in specified circumstances based on the borrower's profile.

2. Old or used commercial vehicle loan: These are loans that are available to purchase all makes of pre-owned or used commercial vehicles. Borrowers can expect to receive financing against old vehicles that are up to 15 years old under this loan. Most banks will fund up to 90% of the old vehicle's value or depreciation grid value.

3. Commercial vehicle refinancing; In commercial vehicle refinancing, banks can give a loan on an existing vehicle that is free of debt or take over an existing commercial vehicle loan and provide extra money based on eligibility. While some borrowers can lower their monthly EMIs and free up cash by refinancing an existing loan at a cheaper interest rate, others can arrange direct financing on their own vehicles to satisfy their working capital needs.

What is the purpose of a Commercial Vehicle Loan?

Commercial vehicle loans are available to cover the buying of a new or second-hand vehicle that will be used primarily for commercial or company reasons. Leading lenders in the country, such as ICICI Bank, YES Bank, HDFC, Mahindra Finance, and others, offer these loans at low-interest rates and no collateral. The entire commercial vehicle loan application procedure is quick, easy, and requires less paperwork.

Some banks assign a personal relationship manager from the beginning to the end of the vehicle acquisition process. He or she will complete the loan papers and deal with any issues that arise.

If your profile fulfils the criteria set forth by the lenders, you may be able to obtain a commercial vehicle loan at a cheap interest rate. A commercial vehicle loan has a quick processing period with simple documents and approval.

Once all relevant documentation is received, the loan amount is disbursed within 7 days.