Commercial Vehicle and Construction Equipment Loan

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These are the loans alloted from the financial institution against construction equipments and commercial vehicles, since the price of the equipments and commercial vehicles are on the higher end and is bought for business purpose, the financial institution generally charges a low to moderate rate of interest on them, compared to that of vehicle and equipments bought for personal use.

Benefits of Loan for construction equipments and commercial vehicles

The benefit of loan for construction equipment and commercial vehicles are as follow :
The owner do not have to pay a huge sum of money from their pocket in one go.
The rates of interest are comparatively lower than that of personal use vehicles and equipments. More over the rates of interest can be further manipulated in favour of the customer depending on the customers portfolio and credibility in the market.
Benefit from a high LTV ratio, up to 100% is calculated on the net invoice value of the vehicle and the equipment.
Flexible tenure ranging from 1 year to 5 year.
The turnaround time after submission of document for loan is 4 days only.
Multiple modes of payments are available to make the repayment, to help the borrower, namely :
Electronic clearing system
Post dated cheques
Equated monthly instalments

Eligibility Criteria:

Candidate ought to be an inhabitant of India.
He ought to be an independently employed individual, with some involvement in this business vehicle field or construction filed.
Many financial institutions even provide loans to new clients in the business of transport and construction.
Although having said that still the financial institutions prefers clients who are already in the business of constructions and transport.
The client have to be at least 18 years while applying for this loan.
He cannot not be a minor.
However the maximum age limit drawn by the financial institutions for people applying for this loan is 65.
The client should be in the business of transport or construction at least for 3 years.
The client should have a steady and continous income, from which he can repay the loan amount.
Other sources of income can also be shown by the client to get the loan easily for construction equipment and commercial vehicle.
If the client already have commercial vehicle or construction equipment bought previously on loan, the loan disbursment gets easier, however for new clients the norms are different.

This may vary from institution to institution.

Documentation requirement for Loan of construction equipments and commercial vehicles

Age proof
Id proof
Photograph
Application form
Residential proof
Income proof
Current repayment track
Contract copies
Signature verification proof
Exsisting vehicle or equipment if any, ownership proof
Pro- forma invoice

Last 2 years audited financials is compulsory in case of Private Limited Company, Limited company ,Partnership Firms, Societies and Trusts

Post-sanction of loan and Pre-disbursement the following documents are further required:

Loan agreement document signed with RTO set for vehicle and Construction and devlopment set of government office.

Post dated cheques, ECS forms, and standing instruction request.

Margin money receipt.

Insurance coverage note.

Features of the loan

Interest rates

In general the interest rates of Construction equipment and commercial vehicle loans varies from institution to institution, however the margin varies from 10% to 15% completly based on loan amount and tenure of the loan.

Well to understand whether the rates charged are compounded monthly or annually we need to understand the what is EMI. EMI is a combination of both the interest and principal portion of the loan, to be paid every month. Hence we can say interest rates are compounded on a monthly basis, since the fixed rate of interest creates a fixed EMI. However the EMI keeps on changing every month in case the interest rates are floating in nature.

Secured or Unsecured?

Construction equipment and commercial vehicle loans are secured in nature as a result of which the asset is a collateral for the loan. In case of failing to pay the loan the lender can take possession of the asset. However when the lender take the possession of the asset due to default you could still end up owing money on the loan if you are a defaulter, if the asset does not sell for enough money to cover the loan amount. The loan applicant will be responsible for paying the difference.

Is pre-payment of loan allowed?

Yes pre-payment or fore closure is possible in case of Construction equipment and commercial vehicle loans.

What are the prepayment charges?

The pre payment charge can go upto 9.85 % to 11.00 % + taxes of the Principal Outstanding upto 180 days from date of disbursement and 4.75% to 6.00% of the Part Payment amount after 180 days from date of disbursement + taxes as applicable. However these charges may vary from institution to institution.

Modes of payment for Construction equipment and commercial vehicle loans?

Multiple modes of payments are available to make the repayment however swapping between the different payment option will be charged Rs500.
Electronic clearing system
Post dated cheques
Equated monthly instalments

Charges of late EMI ?

The charges of late EMI on working capital loan is 24% per annum.

What are the loan proccessing charges?

The loan processing charges for Construction equipment and commercial vehicle loans is 10% to 12% on the loan amount inclusive of the interest rate this charge is non refundable. However these charges may vary from institution to institution.