Commercial Vehicle Loan in UAE

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If you are a self-employed individual or a business owner in the UAE, you might have made plans to purchase a commercial vehicle. However, these vehicles require a substantial investment to get them. Now, to lower the financial burden of this purchase, you can consider opting for commercial vehicle finance in UAE.

This is like any other car loan that you can get to purchase a personal vehicle, but the purpose here is different, and so is the loan structure in some cases. Read on to learn more about commercial vehicle loans.

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What is the Purpose of Commercial Vehicle Finance in UAE?

As mentioned above, this loan is issued to individuals who will utilise the sum for business or commercial purposes. This type of finance is offered by leading banks in UAE, including ADCB Bank, Ajman Bank, RAK bank, Commercial Bank of Dubai and more.

The application procedure for commercial vehicle finance can be completed online, which makes it simple and hassle-free.

Features  & Benefits of Commercial Vehicle Finance

With a commercial vehicle loan, you can finance the cost of buying a vehicle for your transportation business. The various features of this loan are:

  • You can receive a loan with lower interest if you exceed the eligibility parameters set by the bank or financial institution.
  • Upon providing all documents, the processing time is not long. 
  • Most banks in the UAE provide commercial vehicle loans at affordable rates and flexible terms and conditions.
  • Some lenders also finance up to 100% of the cost of a vehicle.
  • Banks in UAE also feature Shariah-compliant products available with them.
  • The minimum turnaround for this financing ranged between AED 250,000 and AED 1 million. That said, the higher the turnover of your business, the higher your chances will be of getting loan approval.
  • Most banks and financial institutions offer a maximum amount of AED 350,000 to AED 30 million, depending upon your eligibility.
  • On average, lenders require a business to be at least 1 to 2 years old to avail of a commercial vehicle loan.
  • You can opt between conventional and Islamic finance options.

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Types of Commercial Vehicle Loans in UAE

Depending on the type of vehicle, commercial vehicle loans can be categorised into the following types:

1. New Commercial Vehicle Loan

As the name suggests, this type of loan is extended to individuals who want to purchase a new commercial vehicle. Some banks tend to offer up to 100% of the base frame of the chassis value of the vehicle. Some financial institutions might also agree to provide additional funding for the vehicle’s body construction, based on the borrower’s credit profile.

2. Old Commercial Vehicle Loan

If you are planning to purchase a pre-owned commercial vehicle, you would have to opt for old commercial vehicle finance in UAE. You can expect to receive financing for vehicles that are up to 15 years old. Most banks and financial institutions provide up to 90% of the vehicle’s value for old vehicles.

3. Commercial Vehicle Refinancing

Under this, banks or financial institutions offer a loan on an existing commercial vehicle based on its eligibility. You can use this option to pay off other types of credit or meet your working capital needs easily.

Who Can Obtain A Commercial Vehicle Loan?

Lenders offer a commercial vehicle loan to various individuals, considering they meet the eligibility parameters. The following individuals are typically allowed to obtain a commercial vehicle loan:

  • Business owners
  • Small and medium-sized fleet owners
  • Public and private limited companies
  • Self-proprietorship and partnership firms
  • Schools and colleges
  • Trusts and Societies

What Are the Benefits of Obtaining A Commercial Vehicle Loan?

Commercial vehicle finance in UAE comes with an array of benefits, such as:

  • Usually, banks offer this credit with a flexible repayment tenure. This ensures that you are less burdened with the EMI payments.
  • The application process is extremely convenient and online. You simply have to fill in the application form and submit it with the necessary documents without visiting the branch physically.
  • Since this is a secured loan, your credit Score is not much of a concern. In simple terms, you may get a commercial vehicle loan even with a low credit score.
  • Most lenders offer this loan with simple documentation. You just have to submit a few documents to begin the process.

Documents Required to Obtain a Commercial Vehicle Loan in UAE?

To avail of a commercial vehicle loan in UAE, you need to submit the following documents:

For new Cars

  • Salary certificate
  • Your bank statement for the previous 3 months
  • UAE residence visa and copy of your passport
  • Security cheque
  • Post-dated cheque
  • Vehicle insurance

For Used Cars

  • Valuation issued by an Emirates Islamic approved dealer
  • Ownership title
  • A quotation or offer to sell from the current owner

Eligibility Criteria for A Commercial Vehicle Loan in UAE

The eligibility parameters to secure a vehicle loan in UAE for commercial purposes are as follows –

  • Minimum business vintage should be 2 years
  • At least one business partner is involved for more than 2 years
  • No cheque return in last 3 months and 1 cheque return in last 6 months
  • Annual turnover is at least AED 1 million

Now, a point to remember here is that these are tentative parameters, and they change based on the lender you opt for. So, get in touch with the bank for more details on this.

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Things to Remember Regarding Commercial Vehicle Finance in UAE

Mentioned below are a few pointers you should remember before obtaining this type of financing:

  • You cannot reschedule your auto finance
  • You cannot sell out your loan
  • Your insurance complies with vehicle financing
  • You can bargain for the loan amount and interest if you exceed the eligibility parameters

Interest Rate of Commercial Vehicle Loan in UAE

Here is a tabular representation of the interest rate applicable on commercial vehicle finance in UAE –

Bank name Interest rate (%) Processing charges Early settlement fee
ADCB 2.75 1% 1%
ADIB 3.99 AED 500 NA
Al Hilal 2.49 AED 250 NA
Arab Bank 3.99 3% NA
CBD Murhaba 3.25 2% 1%
Dubai Islamic Bank 2.99 AED 600 1%

Obtaining commercial vehicle finance in UAE is one of the best ways to finance vehicle purchases for your organisation. This will allow you to steer clear of any financial issues and help you complete your goals.

Q1. Is it possible to get a commercial vehicle loan even if I fail to meet the eligibility parameters?

Ans: Yes, you can get a loan to purchase a commercial vehicle without meeting the eligibility criteria. You can do it by adding a co-applicant, including all your secondary sources of income and by making a higher down payment.

Q2. Who is eligible to become a co-applicant for the commercial vehicle loan?

Ans: Your spouse, parents, or siblings can be your co-applicant in the commercial vehicle loan.

Q3. When will I get the legal claim on my vehicle?

Ans: You will be able to get a legal claim on your vehicle once you pay the last EMI. Afterwards, the bank will cancel the lien and issue a letter of successful closure of the loan and a NOC. Also, paying off the loan will remove the hypothecation from the Government records as well.

Q4. Can I foreclose my commercial vehicle loan?

Ans: Yes, it is possible to foreclose your vehicle loan. But, make sure you are aware of the related terms to avoid any hassle.

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