Commercial Vehicle Finance

Commercial Vehicle Finance – Things to Know before you apply

Do you own a business? If your answer is yes, you just cannot make a deal that is unprofitable. Even if you apply for a specific loan, you need to consider the benefits associated with it. Again, if a business uses commercial vehicles it is advisable to opt for the commercial vehicle finance which is beneficial in the long run. Most of these loans offered by the financial institutions have customized solutions that are apt for a specific business. Most of the companies offer these loans based on the basic principals that includes the dynamic concept of fast, competitive, convenient and simple. Having the basic information on these  loans can help you choose the  one that fits your requirement.

What is a Commercial Vehicle Finance?

Commercial Vehicle Finance
Commercial Vehicle Finance

These loans are provided by the financial institutions for the purchase of commercial vehicles like heavy mixers, trucks, buses and tippers. You can think of getting a 100%loan for the value of the commercial vehicle required. You can apply for these loans either with banks or even Non-banking Financial Company. Yeah, all of them have different interest rates.

Interest Rates:

The rate of interest always depend on the cost, inherent risk to the bank, operations cost, repayment tenure, ratio of loan to value, the market rates at the time of application and other factors. Propriety firms, partnership companies, individual companies, trusts and all those who require transportation facility for the running of their business can apply for this loan.

The rate of interest also depend on the financial company or the bank. Some of these offer variable rates of interest and some offer the fixed rate. These rates can also depend on the background of the customer. This includes the business turnover, the number of commercial vehicles the customer has, the payment capacity etc.

The Amount of Loan and Duration:

A borrower can get this loan for a period of six months right up to 4 years. The internal structure like the engine, suspensions, transmission of the commercial vehicle can be funded to 100%. The amount of the loan sanctioned depends on the borrower and the lender.

There is a possibility of a customer getting the required loan even if the eligibility criteria are not met. The application needs to be done with a co-applicant. This is then considered according to the financial status and the credit profile of the co-applicant.

The Required Documents:

Once you have applied you need to make sure about the documents required by the chosen lender. Most often the requirements consist of an address proof, which can be a passport or a ration card, records of loans taken in the past along with the bank statements. You also need to provide the IT returns. You need to clarify with the bank or the financial company you are applying this loan with, for the exact requirements.

Charges Included:

The borrower will be required to make the payment of charges which includes the stamp duty fee, fees for the vehicle valuation and the processing fee which cannot be refunded. Most of these charges depend on the amount of loan taken. 


This requirement of a guarantor can be waived depending on your credit score and profile.

Repayment of the Loan:

More often, the borrower needs to repay the loan on a monthly basis. The payment is fixed as per the signed agreement, which includes the interest as well as the amount. You can think of getting this loan approved within a week in most of the cases. The sanction depends on the lender and the amount is directly disbursed to the dealer of the commercial vehicle.

Opting for this commercial vehicle finance makes the budgeting a simple procedure as the borrower can spread the cost of the commercial vehicle over the agreed period of loan repayment. Purchase of a commercial vehicle without opting for a loan may prove to be a costly affair. 

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