Commercial Vehicle

The eligibility of a Commercial Vehicle Loan depends upon various factors, including the following important ones:

• Income of applicant
• Number of vehicles the borrower is already owning
• The credit score of applicants
• Vehicle model and Value
• Income and creditworthiness of the co-borrower or guarantor
• Lien free asset/ viability
• Existing Contracts
• Other non-financial information

Loan to value is the ratio of Loan Amount to Collateral Value. This concept is the key factor for all types of secured loans. LTV for commercial vehicle ranges between 85% to 100% of the cost, which may be Ex-Showroom or On-Road cost. In the case of used vehicle finance, LTV is less than 80% of the market value of the vehicle.

Existing Loans are part of credit decision making. The lender verifies the repayment track of existing loans and the impact of existing loans ineligibility. There are no restrictions on having multiple loans as long as the borrower is still eligible for a further loan. However, lenders prefer to evaluate such borrowers more stringently than a borrower with fewer loans.

Foreclosure or Pre-payment is the process when one repays the loan before the loan tenure ends. Foreclosure of loan comes with penal charges depending upon the number of EMIs paid. Shorter the EMI servicing period, higher the penal charges. Foreclosure charges range between 2% to 5% of the outstanding amount.

Minimum EMI servicing period to be eligible for foreclosure is 6M to 12M depending upon the policies of each lender.

Ex-showroom price is the price of the vehicle, including GST but excluding local duties and statutory charges. On-road price is the price one pays for the vehicle, including the ex-showroom price and cost of registration, insurance, municipal entry tax, road tax and any accessories. The on-road price tends to be 15-25% more than the ex-showroom price and may vary from city to city. Road Tax is either paid quarterly or annually.

In-vehicle loan, the vehicle is the security and is hypothecated to the lender till the loan is fully repaid along with interest. Hypothecation gives the right to the lender to acquire the asset, in case the borrower does not pay his EMI on time. The hypothecation letter is a part of the car registration papers. Once the borrower has paid all the EMIs, hypothecation is removed. Hypothecation can be removed by visiting the Regional Transport Office (RTO) along with documents such as No Objection Certificate (NOC), insurance papers and address proof.