How to Apply For A Commercial Vehicle Loan?
“Commercial Vehicles” refers to almost any big vehicle used mostly for commercial transportation or service. Dump trucks, box trucks and vans, semi trucks, tractors, and sometimes fire trucks fall under this category. So what distinguishes a commercial vehicle loan? Financial institutions frequently provide vehicle loans for a standard car, and small companies often ask for bank loans. Yet, banks rarely finance commercial vehicles to small enterprises or sole proprietors with less-than-perfect credit ratings or scores.
It implies that the initial phase in financing your truck or fleet of trucks is to locate a commercial vehicle lending organisation. These providers frequently work closely with dealers who can provide financial products and services to prospective customers.
Are you considering purchasing a commercial truck to help your small company thrive? Here, we’ll explore several sorts of commercial vehicles loan and how acquiring one might generate income for you.
What Exactly is Commercial Vehicle Loan?
A commercial vehicle finance loan, or business auto loan, is a line of credit specifically approved for purchasing a vehicle for commercial reasons. It is a kind of commercial vehicle finance for transport companies or smaller companies requiring an automobile for various business purposes.
Commercial vehicle loans are readily available for buying buses, trucks, tippers, transit mixers, many other commercial vehicles, and light commercial vehicles such as matador vans. While most business car loans are applied to acquire new automobiles, customers can finance used automobiles.
Multiple financial organisations nationwide provide tailored finance solutions for financing automobiles for commercial and corporate use. These financing options can be tailored to the individual’s specific requirements and may be used to acquire any commercial vehicle. In addition, these loans include low commercial vehicle loan interest rates and quick processing and confirmation, making them the most suitable alternative for buying commercial automobiles.
Different Types of Commercial Vehicle Loans in India
Commercial auto loans are available for various automobiles used in different settings and for multiple reasons. Business loans for vehicles are classified into three major categories according to the type of vehicle for which they are obtained, such as:
i) NEW COMMERCIAL VEHICLE LOAN
This loan is available for acquiring brand-new commercial vehicles and provides up to 100% financing on the chassis. Some financiers also give sufficient money on the truck financing for bodybuilding, depending on the claimant’s creditworthiness.
ii) USED COMMERCIAL VEHICLE LOAN
Companies can also purchase pre-owned or even used automobiles. Most institutions will finance the acquisition of vehicles up to 15 years old. In addition, used commercial vehicle loans are frequently used to buy commercial vehicles at low-interest rates. These loans can often fund up to 90% of the sales price.
iii) REFINANCING COMMERCIAL VEHICLES
Creditors (banks or NBFCs) provide business auto loans on a completely debt-free vehicle or take over for an existing commercial vehicle loan. They also provide extra funds, depending on an individual’s ability. Although some debtors can cut their monthly EMIs and save up some money by refinancing an existing mortgage at a reduced interest rate, few others might acquire direct financing on their free business truck loan to satisfy their working capital requirements.
The Eligibility Criteria & Documents You Need Before Applying for Commercial Vehicle Loan
As you have now thoroughly understood the concept of commercial truck financing and the types of commercial vehicle loans in India, it is time to dig into the eligibility criteria and what documents you need to carry while applying.
ELIGIBILITY CRITERIA
The eligibility criteria every prospective customer must fulfil for acquiring new or used commercial vehicle loans are here.
For New Commercial Vehicles
- Salaried consumers must possess at least two years of stable work, and self-employed applicants must have at least two years of company experience.
- Private/Limited enterprises, partnership firms, charities, unions, and alliances must have operated for at least two years.
- Fleet operators and other current vehicle drivers must confirm ownership of one or two commercial vehicles dating back 1 to 3 years.
- Limited liability businesses, partnership firms, trusts, and societies Businesses must submit two years of audited financial statements.
- Individuals, first-time purchasers, and fleet operators/owners occasionally require an internal/external guarantor.
- Clients must have a minimum of two years of residence stability. (Debtors with less stability are liable for additional terms and restrictions).
For Old Commercial Vehicles
Consumers asking for a business auto loan for used vehicles must fulfil the following requirements in addition to the basic ones:
- Applicants must have 3 to 5 years of relevant work experience based on their specific profile.
- Condition of one-year ownership of at least two automobiles.
- Commercial vehicles must have a payback history of at least one year for seeking commercial truck loans.
DOCUMENTATION YOU NEED TO HAVE
Individuals or organisations can request a commercial vehicle loan with a financial institution or online. The applicant must complete a registration form and provide supporting documentation. It will be approved once the paperwork has been checked for your new or second-hand commercial vehicle finance.
KYC Paperwork and Proof of Residency
- Aadhar Card
- Pan Card
- Voter Identification Card
- Rental Agreement
- Authorised Driving License
Income-Related Information
- Last three months’ salary slip
- Last six months’ bank statements
- ITR (Income Tax Return) for the previous two years
Additional Documents
- A cheque for the processing fee
- Two passport-size photographs
- Duly attached with the application form
- Proof of existing vehicle ownership
- Proper vehicle information and a valuation report
- Insurance and RC copy of the owned vehicle
- Fleet list details (for fleet operators)
- Proof of property ownership (for farmers)
- Trade references ( Applicable for first-time buyers, fleet owners & experienced borrowers)
- Audited financials over the last two years (for private or limited businesses, partnership firms, trusts, and societies)
- Track loan repayment (if applicable )
Know About Commercial Vehicle Loan Interest Rates
Now is the right time to know about commercial vehicle interest rates for better understanding.
Commercial auto loan rates 2023 range from 10 to 15 per cent per year. However, they can differ depending on the purchased vehicle and the individual’s profile.
After evaluating the claimant’s papers, the borrower will certify the exact commercial truck loan interest rates that will be charged. If you seek financing for a used commercial vehicle, the interest rate will differ from a new vehicle’s.
How Can Commercial Vehicle Loan EMI Calculator Help?
Manually determining EMIs could be a time-consuming and daunting process. A commercial loan EMI calculator might help in this situation.
A commercial vehicle loan calculator is a web-based application that calculates your loan’s equivalent monthly instalments according to the data you enter.
It will assist you in making an informed selection regarding the monthly cash outflow for your company’s debt repayment.
Thoughts Before Closing
Hopefully, we’ve discussed everything you want to know before applying for a commercial vehicle loan. This article has given you an overview of how to plan before seeking heavy-duty commercial vehicle financing.
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