All You Need to Know About Commercial Truck Loans

Published September 25, 2020 by WC Team

All You Need to Know About Commercial Truck Loans

Commercial truck loans are given to people who purchase trucks for business or commercial purposes. This loan can be given to individuals, organizations, partnership firms, trusts, and others. These commercial truck loans are for people who are mainly a part of the transportation business.

When applying for loans, you need to check the commercial truck loan interest rates suitable for you. There are many different interest rates that you will be exposed to when applying for these loans. Apart from this, there are also many other factors involved. 

Learning about the features and types of commercial truck loans will help you during the application process. You also need to know the eligibility criteria and documentation required to avail of the commercial truck loan.

Features of Commercial Truck Loans

  • The commercial truck loan interest rates will be much lower for you if the lenders' criteria match your profile. 
  • Many financial institutions provide commercial truck loans at very affordable interest rates without security.
  • Commercial truck loans have a very fast processing time if the right documentation is provided.
  • After submitting the documents, the loan amount may be disbursed sometimes within a week.
  • Some institutions provide relationship management who takes care of the loan procedure.

Types of Commercial Truck Loans

There are different kinds of commercial truck loans, and the one you take will depend upon the kind of truck you are willing to buy.

New Commercial Truck Loan

The first kind of loan is only for customers who want to purchase a new commercial truck. For these loans, the funding is generally for the complete amount. Some financial institutions also provide funding on the truck’s body construction.

Old Commercial Truck Loan

As the name suggests, the old commercial truck loan is for people who want to buy used to old trucks. Customers can buy trucks that are used or used and are not more than 15 years old. Trucks that are older than that would not fall under the loan criteria. For this loan, the funding will be a major part but may not be the complete amount.

Commercial Truck Refinancing

Under commercial truck refinancing, financial institutions may offer a loan on a truck that no longer has a loan. The refinancing can also be given on trucks with an existing loan but needs to be given additional finance. This refinancing can be used by customers to reduce the EMI of their current loan. 

Users Eligible for Commercial Truck Loans

Truck loans are for people who specifically need trucks for business uses. Eligible people will only avail of these loans. You can get interesting commercial truck loan interest rates based on your profile.

  • Consumers who are eligible for commercial truck loans are as follows –
  • Self-employed Individuals
  • Different fleet owners
  • Private and Public Limited companies
  • Transportation companies
  • First-time buyers
  • Partnership and Proprietorship firms
  • Salaried employees with blood relatives

Documentation for Commercial Vehicle Loan

  • Application form with your photograph attached
  • Processing fee cheque
  • 2 photographs (passport-sized)
  • Age proof
  • Residence proof
  • Identity Proof
  • Income Proof
  • Other Documents as required by the bank

Different Aspects of Commercial Truck Loans

Application Process

The first step to any loan application is filling up the application form. Here you will need to fill in your necessary details correctly. Make sure that you do not include the wrong information, as it could lead to the cancelation of the loan.

The agent will check the information you provide in the application form. If any wrong or fake information is found, you will not be able to avail of the loan. Along with the application form, you will also have to provide supporting documents as proof.

Loan Approval

Once you fill out the form, the details you provide will be verified. You will be given different commercial truck loan interest rates according to your profile. You can choose the margin and rates that you feel would suit your budget.

After you agree to these and fill out the application form, the loan would either be approved or declined. If the agent feels that the information and your profile are eligible for the loan, it would be approved.

The agent will run a background check and verify the documents that have been provided by you.

Loan Amount

The loan amount will vary for each customer, depending on the vehicle the customer is buying. Customers can get a part of the full amount of the loan based on the truck type and the vehicle's cost.

Once the bank has approved the loan, the agent will let you know about the loan margin that you would be given. Here the commercial truck loan interest rates would also be explained to you by the agent.

Repayment Period

The repayment period is the time frame given to the users to pay off the loan amount. You will have to ensure that the loan is paid off completely before the period ends, or you will have to face a penalty.

During the first part of the repayment period, you will have to pay off the interest. The amount will depend on the commercial truck loan interest rates that you have sanctioned for. The loan amount can be repaid in the form of monthly EMIs. Missing the monthly payments will affect the credit score. 

Collateral or Security

When applying for commercial loans, most banks give it without any form of collateral. However, some financial institutions may require you to provide collateral. This is especially when the loan amount is at a higher level. Some banks ask for a co-applicant or a guarantor for approval of your loan.

The collateral will depend on the profile of the borrower and the loan type. Whichever collateral you provide should be of the same value as that of the loan amount. The collateral is taken in case you are not able to pay back the loan. In such cases, the collateral would be taken by the bank to pay for the loan amount.

To Sum Up

You cannot go and avail your truck loan just like that. Even before you apply for one, you need to know the different aspects of commercial truck loan interest rates. This will help you to know the best rates and places to apply for. 

Go through the above-mentioned pointers to get a clear picture of the commercial truck loan interest rates and invest smartly.

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