Commercial Vehicle Loans – Tips To Choose the Right Lender

Introduction

Expanding your business often requires the addition of commercial vehicles like trucks, buses, or pickups. However, purchasing a commercial vehicle requires a significant investment. This is why commercial vehicle loans have become a popular financing option. 

There are several commercial vehicle finance companies that offer these loans, but you need to evaluate a few things before going for a commercial vehicle loan. In this blog post, we will guide you on how to choose the right lender.

So, let us get started.

7 things to consider before choosing commercial vehicle finance companies

Here are the 7 things you need to consider before picking the right commercial vehicle loan lender:

Interest rates

The commercial car loan interest rate offered by lenders significantly impacts your monthly repayments. Therefore, it is vital to compare interest rates offered by different lenders before making a decision. 

For example, Lender A offers an interest rate of 9% per annum, while Lender B offers 10% per annum. Using a commercial car loan EMI calculator, you find that the EMI for Lender A would be approximately ₹20,187, while for Lender B, it would be around ₹20,661. By choosing Lender A, you can save around ₹474 per month or ₹5,688 per year.

Documentation and approval

Existing or pre-approved customers need not submit documents when applying for a commercial vehicle loan with a lender. For new customers, the required documents are limited to Officially Valid Documents for KYC, bank account statements, and the latest salary slips. The lender usually processes an application for a commercial vehicle loan within a few business days. 

Loan tenure

Repayment terms can differ significantly from one finance company to another. Lenders may offer longer tenures, resulting in lower EMIs but higher interest payments over time. Conversely, shorter tenures may lead to higher EMIs but lower overall interest payments. 

Consider your financial situation and choose a tenure that aligns with your repayment capacity.

Fees and charges

Before finalising your commercial vehicle loan with any lender, make sure to enquire about any additional fees and charges associated with the loan. Commercial vehicle finance companies may charge processing fees, documentation fees, or other hidden costs that can significantly increase the overall cost of borrowing. 

Loan foreclosure

Loan foreclosure refers to the option of paying off your loan before the agreed-upon tenure. Often, financial institutions charge penalty fees if you decide to settle your loan before a certain period of time. 

It's important to compare these foreclosure charges and choose a lender that offers flexible prepayment options without excessive penalties.

Down payment

The down payment is a critical factor when purchasing a costly commercial vehicle. If a lender is willing to offer a higher loan finance percentage, it can reduce your initial financial burden and allow you to pay a lesser down payment. 

It's advisable to check with multiple commercial vehicle finance companies to find one that offers a higher loan finance percentage.

Reputation of the lender

When choosing a lender for your commercial vehicle loan, considering the reputation of the company and its customer support is equally important. A trustworthy and reliable lender will provide better customer service throughout the loan application process and beyond. Look for reviews and ratings online from other customers who have availed loans from the same company.

Conclusion

Choosing the right lender for your commercial vehicle loan is crucial for ensuring a smooth borrowing experience and favourable repayment terms. Take the time to compare the commercial car loan interest rate, understand repayment terms, evaluate fees and charges, and consider prepayment options. You can use a commercial car loan EMI calculator to estimate your monthly payments and better plan your finances.

When it comes to commercial vehicle loans, Mahindra Finance is a trusted name in the industry. With Mahindra Finance, you can get a commercial vehicle loan for both new and used vehicles. Plus, depending on the asset class, you can get up to 60 months of tenure for new vehicles and equipment and up to 36 months for used ones.

FAQs

1) Can I get a commercial car loan for a used vehicle?

Yes, many lenders offer commercial car loans for used vehicles.

2) What factors affect the interest rate on a commercial vehicle loan?

A commercial car loaninterest rate can be affected by factors such as credit score, loan amount, loan tenure, down payment amount, and the type of vehicle being financed.

3) How can I calculate my commercial vehicle loan EMI?

You can use an online commercial car loan EMI calculator provided by lenders or financial websites. Enter details such as loan amount, interest rate, and tenure to get an estimate of your monthly EMIs.

4) Can I prepay my commercial vehicle loan before the tenure ends?

Yes, most lenders allow prepayment or foreclosure of commercial vehicle loans. However, they may charge certain fees or penalties for doing so.