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If you are starting a logistics business or a trucking company and want to avail a business loan to purchase/rent a truck or expand an existing business or any daily operational reasons, what you need is a business loan for trucking company. Many lenders in India club it under the commercial vehicle loan while others provide loans for truck business exclusively. These loans can be used to buy all types of trucks including pickup vans, plow trucks, semi trucks, both first hand and previously-owned.

Business Loans

On that note, let us take a look at trucking company business loans – where to find it, what are the eligibility requirements, documents required, interest rates and other details you should know about.

Truck business loan – Meaning and how it works

In India, most bank and NBFC loans, don’t offer have a separate category for trucks. A commercial vehicle loan is offered by leading banks like SBI, HDFC Bank, YES Bank, Bank of Baroda, and NBFCs including Mahindra Finance, Fullerton India, among others.

Commercial truck finance enables businesses to solve their immediate and future funding needs. The truck purchased doubles as collateral for the loan, meaning that you do not have to pledge any personal asset or property to avail the business loan. If you default on your loan repayment, the lender can seize your truck to recover the loan amount. Some lenders however require additional collateral based on the risks involved or may request for a guarantor.

Business loan for trucking companies – Overview

Here’s a quick snapshot of commercial vehicle loan and truck finance options that you may consider for getting a business loan for trucking company.

Bank/NBFC name Loan amount + tenure Interest rate Key features
HDFC Bank Commercial Vehicle Loan 100% finance offered

Finance for body construction provided based on borrower’s profile

Tenure – Up to 40 months

Competitive interest rates

7.75% – 16.70%

Loans for new and used vehicles, balance transfer, and top up loan

Truck types for loan – small truck, light truck, medium truck, heavy truck, customised truck

IDFC First Bank

(CV loans)

New – Up to 100% on-road price of the vehicle

Tenure – Up to 60 months

Pre-used – Up to 90% of the current market value

Vehicle age up to 12 years

Refinance on pre-owned CVs – Up to 100% funding of the current market value

Tenure – Up to 48 months

7.5% – 30.0% + other charges and fees Guarantor not required

House (collateral) not required

 

ICICI Bank (CV loans) Up to 100% of chassis value

Body funding available on special requirement

Competitive interest rates + other charges Financing for trucks (light and heavy)
Bank of Baroda Commercial Vehicle Finance Amount – Up to ₹30 crores

Tenure – Up to 5 years

Margin –

Up to 95%on fully built vehicles

Up to 100% on chassis and 60% on the body

Concessional and competitive interest rates + processing fees Available to first time buyers, existing fleet operators, captive users

 

SBI Commercial Vehicle Loan Loan amount – ₹10 lakhs – ₹50 lakhs

Margin – 15% on on-road price

Tenure – Up to 84 months (for CVs)

Up to 48 months (for EVs)

Competitive rates

Upfront fee – 0.50% of the loan amount + GST

Min. 2+ years in hospitality or transport industry

Collateral not required

Loans covered under CGTMSE

Chola Commercial Vehicle Loans

(Cholamandalam Finance)

Up to 100% funding (new)

For used truck loan – Low down payment

Attractive interest rates Types of commercial vehicle – Light commercial vehicle (LCV), Heavy commercial vehicle (HCV), Intermediate and Light Commercial Vehicles (ILCV), Medium and Heavy commercial vehicle (MHCV)

Collateral-free loans (new), no-guarantor required (used)

Mahindra Finance Loan amount – Flexible

Tenure – Up to 60 months (for new vehicle) and up to 36 months (for used vehicles)

Reducing interest rates + other charges Loans for new and used (up to 15 years) commercial vehicle

Collateral not required

*This information is for reference only. Readers/borrowers are requested to visit the lender’s official websites for more information on business loans for trucking companies.

Business loans for trucks – Eligibility requirements

An important thing for you to understand is that business loans for trucks are availed for commercial purposes – it can be for doing deliveries, for goods transportation, or any other. Based on the type of truck company, the loan can be for a single truck or a fleet. It’s recommended that, as a borrower you understand the specific requirements of a lender before availing a commercial loan for trucks from them.

Individual profile:

Business profile:

  • Minimum 2+ years experience in the trucking business
  • GST details and ITR
  • 3+ years industry experience
  • Business credit report, i.e., financially profitable company
  • Existing loan repayment track record
  • Type of business – Truck companies, fleet operators, logistics companies, transport operators, contractors, business enterprises, hospitality sector etc.

Commercial loans for truck company – Documentation

Whether you are an existing trucking company or want to start one, whether you have an existing fleet and want funds to maintain or expand it, or want to buy new trucks for your business, every lender will require some basic documentation to check your creditworthiness and reduce their risks. The process of business loan recovery is not easy and most lenders would want to avoid it. Neither would they want a case of loan settlement.

The documents for business loans for a trucking company as such will enable lenders to sanction loans up to a certain amount based on the vehicle in question. Here’s a list of the commonly asked loan documents for trucks:

Business Loan
  • Duly filled in loan form and 2 passport sized photos
  • KYC documents – e.g., Aadhaar, business and personal PAN
  • Income proof – ITR, bank statements, CA audited balance sheets and P/L statements, business loan repayment track records
  • Vehicle related documents – Copy of RC and insurance, vehicle valuation report
  • List of other trucks/commercial vehicles owned by the company/contractor/sole proprietor

Trucking company business loans – Interest rates & loan EMI calculator

As seen in the above table, interest rates on loan for trucking companies vary based on the lender and the type of truck (new or pre-used) you are purchasing. However, in general, here’s a list of the basic interest rates and other charges and fees you will have to pay for a trucking company business loan:

Interest rate on trucking company business loan 7.5% – 30.0%
Processing fee 2% – 5% of the loan amount
Stamp duty At actuals
Documentation charges Up to ₹20,000
Valuation & Asset verification At actuals
Foreclosure/Prepayment Check with lender for exact foreclosure charges based on loan amount and EMIs pending (usually 2% – 5% of the pending principal)
Loan cancellation Charges applicable
Late payment Applicable (usually up to 3% per month on outstanding)

Truck loan EMI calculator

A truck loan EMI calculator works slightly differently than a regular business loan EMI calculator. Yes, the key inputs remain the same – the loan amount, tenure and interest rates. But when it comes to a truck loan, you will have to pay a downpayment and ex-showroom prices are taken into account. EMI calculator therefore works on a reducing balance basis. Let’s understand this with an example.

Price of truck (ex-showroom, Delhi) ₹18.35 lakh
Downpayment (%) ₹1.84 lakhs (approx. 10%)
Interest rate (%) 11%
Tenure (months) 36 months
Loan amount ₹16.52 lakh
EMI ₹54,052
Total payable ₹19.45 lakh

*This example is for reference only. Please check with your lender on actual loan amount, EMI, and total payable.

How to apply and get a business loan for trucking company

When looking for a trucking business loan, approach a lender either by visiting their website or a local branch in your city.

  • In most cases, you will have to go for a commercial vehicle loan as few lenders have specific loans for trucking companies.
  • Explore options through NBFCs and banks. NBFCs at times have flexible requirements but the interest rates might be higher. Compare offers from lenders and choose the one best suited for you.
With Business Loans through Tata nexarc there’s an easier way to compare loan offers from multiple lenders in one place. We have partnered with leading lenders and offer loans up to ₹50 lakhs with competitive interest rates, quick disbursal, and minimum documentation. Apply now.
  • Based on the lender you have shortlisted, there will be questions asked during availing a business loan, mostly to check your ability to repay the loan as scheduled, your current financial status and business growth plan.
  • You can also use this opportunity to negotiate the business loan offer mostly related to the interest rates, EMI amount, foreclosure period and charges, etc.
  • Based on your profile, a trucking business loan will be offered and you will be required to submit the required documents and complete other formalities.
  • If your profile meets the lender’s checks, your truck loan request will be approved, the business loan for trucking company sanctioned, and the amount will be disbursed within 72 hours (check with lender on disbursal time).

Getting a trucking business loan

When you approach a lender for a business loan for trucking company, it’s important to have your documents and requirements in place. For instance, you must be clear of the type of truck you want to buy, the manufacturer, and the ex-showroom price and any other expenses you will need to bear. Similarly, if you are purchased a previously-owned truck, then the miles travelled, age of the truck, documentation, all of this should be in check. This will build confidence in the lender and facilitate your borrowing process.

Alternatively, do explore other short-term loan and long-term loan options to evaluate if those loan schemes are better suited to your needs. Also, don’t miss out on exploring government loan schemes.