We all have heard of the different loans, including personal loans, car loans, two-wheeler loans and home loans being taken by people for their purposes. However, not much is discussed about commercial loans made to drive business. Commercial vehicle loans can be availed by anyone, including individuals, proprietary firms, Hindu Undivided Families (HUFs), companies (public and private) or anyone looking to buy vehicles to expand their businesses.
Most intended borrowers of commercial loans are engaged in the transportation business. However, with more business opportunities available, the demand for commercial vehicle loans in India has gone up in the past few years, thus, necessitating adequate information about them.
Commercial vehicle loans are not limited to loans secured for the purchase of heavyweight vehicles like trucks and rollers but can be used to buy two-wheeler vehicles too. Lenders avail loans for both new and old vehicles while allowing top-ups on existing loans. Commercial vehicle loans can be divided into three categories, including:
- New Commercial Vehicle Loan
- Old Commercial Vehicle Loan
- Commercial Vehicle Refinancing Loan
Things to Know About Commercial Vehicle Loans
With many lending institutions coming forward to lend commercial loans to their prospective customers, let us look at the primary considerations to keep in mind before taking one such loan.
- Eligibility Criteria
There are no necessary conditions implied to apply for a commercial loan. Those with no credit history can apply for this loan, thus, indicating that anyone and everyone is eligible to avail this loan facility extended by lending institutions.
- Loan Tenure
Borrowers can avail this kind of loan for a period ranging between six months and four years. A lot depends on the loan amount taken and interest rates charged on loan sought. The minimum loan amount you can secure is Rs. 1 lakh while the maximum loan amount can go up to Rs. 5 crores, thus, determining the loan duration.
- Loan Amount & Charges
The loan amount depends on the kind of vehicle you wish to buy for commercial purposes. For example, if you are taking a two-wheeler loan, the interest rates would surely differ from that of paying for a truck or bus or any other vehicle. Lenders availing commercial vehicle loans to their intended borrowers have the two-wheeler loan calculator on their sites. This allows you to estimate the return you would be required to pay whether you are buying the two-wheeler for personal or commercial reasons.
Commercial loan interest rates depend on various factors, including the funding of the internal structure and the entire body of the vehicle. For example, one can avail 100 per cent of the loan on engine, transmission and suspension of a commercial vehicle while specific requests would have to made for funding the body of the vehicle.
Borrowers are also required to pay additional charges including stamp duty equal to two per cent for a loan of Rs. 2 lakhs and four per cent for a loan amount exceeding Rs. 10 lakhs. Non-refundable processing fees range from two to four per cent depending on the loan amount.
Like other loans, borrowers would be required to submcommercial vehicle loans in Indiait documents showing proofs of their identities and addresses. These documents may include Ration Card, Voter ID Card, Passport, Salary Slips over the past three months and bank statements showing income earned over the past two years.
Applicant companies would also have to show their IT returns filed over the past two years along with their balance sheets and records of vehicles bought and driven over the past two years. Individual lending institutions also insist on their borrowers arranging for a guarantor in addition to showing contracts they had signed for transportation of goods.
- Loan Reimbursement
Loan repayment involves payment through monthly instalments. Foreclosure of the entire loan amount consists of a fine of two per cent on the remaining loan amount.