A CV or commercial vehicle loan is a loan an individual takes to finance his/her purchase of a commercial vehicle. The commercial vehicle can be a new one or a used (second hand) one, too. Anyone from a small farmer to a shopkeeper or an entrepreneur can take a loan for the purchase of a CV.

Lenders - banks or non-banking financial companies (NBFCs) – offer commercial vehicle loans to a wide variety of customers.

Here are a few aspects one must bear in mind when applying for a commercial vehicle loan:

- Application process- First and foremost, the borrower needs to fill up an application form either online or offline. He/she must then furnish all the necessary documents and finally provide the details of the personal guarantor, if required.

- Loan approval- The bank/non-banking finance company (NBFC) will run a check to verify the documents and borrower’s eligibility. If the borrower is found to be eligible, the loan will be approved within 2 to 5 working days from the time of documentation.

- Processing charges- Banks ask for a minimal non-refundable amount for processing a commercial vehicle loan. This amount depends on the amount of the loan applied for and generally ranges from 2% to 4% of the loan amount

- Loan amount/margin- The maximum loan amount for commercial vehicles varies from customer to customer based on their individual profile. A borrower can get up funding of up to 100% of the vehicle’s chassis.

- Repayment tenure- The repayment tenure for a commercial vehicle loan usually starts from 6 months and goes up to 60 months (five years). The borrower is allowed to repay the amount in easy monthly EMIs

- Security/collateral- While certain banks offer loans for commercial vehicles without any security or guarantor, some require a guarantor or co-applicant depending on the borrower’s profile and the product.

- Pre-payment of loan- The borrowers can prepay the loan after six months of availing it by paying a pre-payment fee of up to 5% of the remaining loan amount. However, part pre-payment of the loan is usually not allowed.

Please note that the information provided is indicative and can vary from one lender to another. So, ensure you read your loan document very carefully before signing it.