Commercial Vehicle Loan

Commercial Vehicle Loan :

Commercial vehicle loans are financial products provided to borrowers, typically self-employed individuals, partnerships, trusts, professionals, and organizations, for acquiring vehicles intended for business or commercial use.

These loans are particularly sought after by individuals engaged in the transportation sector. A commercial vehicle loan can be utilized to purchase various types of vehicles, including buses, trucks, tippers, tankers, and light and small commercial vehicles.

The interest rates on commercial vehicle loans differ across financial institutions, with lenders determining the rates based on the borrower's profile and the specific vehicle segment. After assessing the borrower’s documents and profile, the lending institution confirms the applicable interest rate, which typically ranges from 10% to 24% per annum.

Purpose of Commercial Vehicle Loans

As mentioned, commercial vehicle loans are primarily taken to finance vehicle purchases for business-related activities. Renowned financial institutions such as ICICI Bank, YES Bank, HDB, KOTAK BANK, and Mahindra Finance offer these loans at competitive interest rates. The application process for a commercial vehicle loan is generally fast, straightforward, and requires minimal documentation.

Features of Commercial Vehicle Loans

Key features of commercial vehicle loans include the following:

  • Eligible borrowers can secure loans at lower interest rates if they meet the lender's criteria.
  • The processing of a commercial vehicle loan is swift, with straightforward documentation and approval.
  • Many major banks in India provide commercial vehicle loans at reasonable interest rates without requiring collateral.
  • Some banks assign a dedicated relationship manager to assist throughout the loan process, managing all documentation and addressing any concerns regarding the loan.
  • Upon submission of necessary documents, the loan amount is typically disbursed within approximately 7 days.

Types of Commercial Vehicle Loans

Commercial vehicle loans can finance a wide range of vehicles used for various functions in different industries. These loans are categorized into three main types based on the vehicle category:

  • New Commercial Vehicle Loan: This loan type is extended to customers for acquiring new commercial vehicles intended for business use, including tippers, tankers, and trucks.
  • Used Commercial Vehicle Loan: Offered for the purchase of pre-owned commercial vehicles, these loans typically fund up to 90% of the vehicle's worth or its depreciation value.
  • Balance Transfer: This process involves shifting the existing commercial loan to a new lender, often resulting in quicker processing times and potentially lower interest rates.
  • Top-Up Loan: If a borrower already has a commercial loan and wishes to obtain additional financing, this is referred to as a top-up loan.

Borrowers may reduce their existing loan's monthly EMIs and increase cash flow by refinancing at lower rates, while others can access direct financing on free vehicles to support working capital needs.

Certain lenders may offer repayment tenures of up to 84 months. Various types of vehicles eligible for commercial vehicle loans include:

  • Medium & Heavy Commercial Vehicles (MHCV)
  • Intermediate & Light Commercial Vehicles (ILCV)
  • Heavy Commercial Vehicles (HCV)
  • Light Commercial Vehicles (LCV)

Bank Name Interest Rate Processing Fee Loan Amount Tenure Range
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