Financing the fleet
Commercial vehicle finance is a mature, competitive market. The vehicle is hypothecated, the resale market is deep and transparent, and lenders will typically fund up to 90% of the on-road cost — a higher proportion than almost any other asset class, and at rates well below unsecured business lending.
Practical points: match the tenure to the vehicle's earning life and to your permit validity, not to the longest term on offer. Insurance is compulsory and is your cost throughout. And when a vehicle loan closes, obtain the no-objection certificate and get the hypothecation removed from the registration certificate — an outstanding hypothecation entry on a paid-off vehicle will complicate both its resale and your next application.
The gap the fleet loan does not cover
This is where transport businesses actually run into trouble. Diesel, tolls, driver advances and maintenance are paid as the trip happens. The freight bill goes to the consignor and settles in forty-five to ninety days — longer with large corporates and government contracts.
So a growing fleet consumes cash faster than it generates it, and adding a truck without adding working capital is a well-worn route into a squeeze. Two instruments fit:
- An overdraft or cash credit limit against your receivables, drawn as trips run and repaid as bills settle. You pay only for the days drawn.
- Freight bill discounting against confirmed bills on large consignors. Priced against their credit rather than yours, which frequently makes it the cheapest money a small transporter can access.
What underwriting looks at
| Checked | Why |
|---|---|
| Fleet size, age and RC copies | Ownership, resale value, existing hypothecations |
| Permits and fitness certificates | An expired permit means the vehicle cannot legally earn |
| Contracts or regular consignors | Committed volume is far stronger than spot-market work |
| Freight bill ageing | Who owes you, and how overdue |
| Fuel spend against revenue | An independent check that the trips claimed actually ran |
| Driver strength | Idle vehicles for want of drivers is a common, real constraint |
A contract is worth more than a good year
A transporter with a twelve-month contract from a manufacturer for committed monthly tonnage is a different file from one doing the same revenue on the spot market. The first has visible forward revenue; the second has a history and a hope. If you hold contracts, put them in the application. If you are pursuing one, it is worth doing before applying rather than after.
Questions this page gets asked
How much of a commercial vehicle will be financed?
Commonly up to 90% of on-road cost for a new vehicle with a reasonable profile, less for used vehicles where age and condition determine both the percentage and the tenure.
Can I get working capital as well as a vehicle loan?
Yes, and most growing transporters need both. The vehicle loan funds the asset; an overdraft or bill discounting funds the gap between running costs and freight settlement. Total obligations across both must still be serviceable.
Do I need contracts to borrow?
Not strictly, but they strengthen the file considerably. Committed volume is forward-looking evidence; spot work is not. Lenders price the difference.
Can a new transport business get finance?
Vehicle finance is available to relatively new operators because the vehicle secures it, though rates and margin requirements are stiffer without a track record. Unsecured working capital at low vintage is much harder — see new business.
My consignors pay in 90 days. What can I do?
Discount the bills rather than borrow against your own balance sheet. If your consignors are large and well-rated, freight bill discounting is usually cheaper than an overdraft, and TReDS is worth checking if they are registered on it.
Fund the fleet and the gap together
Money Bharti compares vehicle finance alongside working capital and bill discounting options across RBI-registered banks and NBFCs, so both halves are structured at once. Soft enquiry only.
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Responsible borrowing note
All rates, fees and eligibility figures on this page are indicative market ranges for illustration and are not an offer. Approval, pricing and the sanctioned amount rest entirely with the bank or NBFC. Money Bharti is a loan marketplace, not a lender. Assess your repayment capacity honestly and read the sanction letter in full before signing. This content is general information, not financial advice.