How To Get a Commercial Vehicle Loan in India

For a transportation or logistics business to thrive, it requires modern infrastructure, state-of-the-art equipment, and efficient transportation facilities. Commercial motor vehicles have become a necessity in sectors ranging from manufacturing and supply-chain to educational, hospitality, and medical services. Hence, the best commercial vehicle loans are not hard to find if you meet the eligibility criteria.

Acquiring the best vehicles as required such as buses, trucks, tankers, and commercial cars can be a costly investment but can prove to be a smart one in the long run. Commercial vehicle finance is a credit tool that helps establishments secure the requisite funds to purchase a commercial vehicle. The end use of these vehicles must be for business purposes such as transporting goods and services or fare-paying passengers.

To get the most affordable interest rate, you should conduct thorough research about the loan schemes offered by various lending institutions.

Policies for commercial vehicle finance differ from one institution to another, and there are different interest rates and tenures for a used commercial vehicle loan and a new commercial vehicle loan.

Commercial Vehicle Loan Types:

Given below are the three main types of commercial vehicle finance:

1. New Commercial Vehicle Loan
New commercial vehicle loans are credit tools to buy new motor vehicles for business/commercial use. Financial establishments disburse loans up to 100% of the vehicle’s market value.

2. Old Commercial Vehicle Loan
Old Commercial Vehicle Loan helps enterprises and companies to buy second-hand or used motor vehicles, which should not be more than 15 years old. Lending institutions grant loans up to 90% of the vehicle’s market value.

3. Refinancing Commercial Vehicles
Most lenders offer the option to refinance your loan. Thus, you can switch to another lender with a lower interest rate for the existing loan. Depending on your applicant profile, you can also acquire more funds for your vehicle.

This type of loan aids borrowers in repaying their debt at the most affordable interest rates.

How To Apply For A Commercial Vehicle Loan?

A commercial vehicle loan provider is ideal for procuring funds for non-personal vehicular needs. It offers much flexibility with its design, tenure, and interest rate. As the loan is curated as per the borrower’s requirements and convenience, arranging for commercial vehicle finance is hassle-free.

Following are the steps to avail of a commercial vehicle loan:

1. Search for lenders that provide heavy vehicle loan services. Opt for the most reliable lender, one who preferably offers pre-closure of loan and the most reasonable rate of interest.

2. Look into the eligibility criteria and ensure that you fulfill all the parameters.

3. Fill in the application form. Digital services offer a start-to-end online application form. You can also visit the nearest branch to fill up the form.

4. Arrange for the necessary documents. These include ID Proof, Proof of Residence, Age Proof, and Income Proof (among others).

5. Declare your guarantor and submit the required details. (if necessary)

6. After assessing your profile and documents, your lender will approve your application.

7. The loan amount will then be credited to your account.

Mandatory Documents For A Commercial Vehicle Loan Application.

Like personal loans and home loans, submitting the stated documents is imperative in a commercial vehicle loan application. The documents required are as follows:

KYC Documents 
• Age proof (Aadhaar card, PAN card, voter’s ID, passport, driving license)
• ID proof (voter’s ID, Aadhaar card, passport, driving license)
• Proof of residence (Passport, voter’s ID, ration card)

Income Proof
• Salary slips (Last 3 months)
• Bank statement (Last 6 months)
• Form 16
• ITR (Last 2 years)

Other Documents
• Proof of existing vehicle ownership
• The valuation report, RC Copy, and Insurance of the vehicle
• Fleet list details (for fleet owners)
• Property ownership proof (for farmers)
• Partnership deed (MOA/AOA) proprietorship declaration, board resolution, audited financials of the last 2 years (for trusts, societies, private/limited companies, partnership firms, etc.)

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Conclude
It is always a good idea to invest in vehicles in good condition. Commercial vehicles improve connectivity and productivity. In most cases, they are irreplaceable elements of the trade. You can start searching for the best interest rates on commercial vehicle loans and seal the deal that best suits your needs.