All You Need to Know About Pre-Owned Commercial Vehicle Loans
As a business owner, you must proactively look for ways to save more of your hard-earned money, while also trying to make decisions that benefit your business. Buying a commercial vehicle can certainly be a smart choice for many businesses, especially if they have to transport goods from one place to another. Companies based in the logistics and transport industry have to maintain an entire fleet of commercial vehicles. Broadly speaking, many businesses can improve their bottom line by investing in the right automobiles. Unfortunately, vehicles do not come cheap, especially heavy commercial vehicles like trucks, buses, and tractors.
To make the purchase more financially feasible for your business, you can opt to buy pre-owned commercial vehicles than new ones. While this can lower your costs sustainably, many MSMEs (Micro, Small, and Medium Enterprises), might still face issues in funding such automobiles on their own. Moreover, it is unwise to deplete the working capital of a business too much to buy a vehicle or even an entire fleet of it. In this situation, taking out second hand commercial vehicle loans to finance the purchase might be your smartest move.
Advantages of used commercial vehicle loans
- Flexible repayment options: A lot of financial institutions, non-banking financial companies (NBFCs) in particular, can provide you with the flexibility to select your loan amount, repayment tenure and EMI period. As a result, you would be able to properly plan the budget of your business and finance a pre-owned vehicle accordingly. Having affordable EMIs will make sure that you can pay off the loan amount without feeling any kind of financial burden.
- Attractive interest rates: The cost of pre-owned automobiles is relatively affordable in comparison to a new one. Hence, today you can find many NBFCs that provide loans for pre-owned commercial vehicles at cost-effective rates. Lower interest rates would invariably imply more budget-friendly EMIs, and help you to pay off your loan with ease.
- Quick approvals: Financing commercial vehicles, including pre-owned ones, have become highly convenient today as the entire process of applying for a loan can be conducted online. Most NBFCs especially have a prompt and simple loan approval and disbursement process. As a result, you no longer need to take time out of your busy schedule to go to a bank or wait weeks for your loan to be approved. You may easily apply for a loan on the website of a reputable NBFC that provides funding for used cars, and the money will be paid to your account in a few days.
Eligibility Criteria for Used Commercial Vehicle Loans
To get your used commercial vehicle loan approved, you have to meet certain eligibility criteria, which are:
- 2 years of valid commercial license
- Property ownership
- Possession of more than one commercial vehicle
The credit history or credit score of your business would also have an impact on the loan approval. Hence, you should try to pay off previous business debts before applying for a loan.
Documents Required to Apply for Used Commercial Vehicle Loan
- KYC Documents: Driver’s License, Aadhaar Card, Passport, Voter ID Card, and PAN card
- Income Proof: Repayment Track Record, RC Copies of Existing Vehicles, IT Returns, and Bank Statements
- Vehicle-Related Documents: Copy of RC and insurance of the new vehicle, vehicle valuation report and other pertinent details. Additional documents based on the specific customer profile may be needed.
To ensure hassle-free loan processing, you must keep gathering the documents mentioned and keep them in one place before applying for the loan. Only basic documentation and paperwork are needed to get an old commercial vehicle loan, and hence you are unlikely to have any problems in providing such documents.
Points to Remember When Applying for a Loan
When applying for a pre-owned commercial vehicle loan, you need to pay heed to certain important factors, including:
- Repayment tenure: Most NBFCs provide repayment tenure options ranging from 12 to 60 months. If you select a short tenure, then you may have to pay higher EMIs but deal with less interest payments on the whole. On the other hand, a longer tenure would ensure that you have enough time to comfortably pay off the loan with affordable EMIs, but you may end up paying a comparatively higher sum of money as interest. You must properly analyze the financial situation of your business and determine the EMI amount that you can comfortably pay, and select the repayment tenure accordingly.
- Fees: Fees including application and origination fees may be assessed by some lenders. Before accepting a loan, you must ensure that you are aware of all the costs and conditions attached to it.
- Lender reputation: Before taking out a used commercial vehicle loan, you must assess the reputation of the chosen lender and go through customer reviews. It is vital to work with a lender who is transparent about their loan terms and provides good customer service.
By following the above-mentioned pointers, you can easily find the perfect financing option for a second-hand commercial vehicle.