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With the advent of app-based taxis, the local transport market has undergone a paradigm change. As Ola and Uber have gained popularity, other players like Meru and DriveU entered the market. The demand for taxi services has been rising parallel to the supply. Since app-based services require drivers to register their pre-owned cars – car dealers have rallied with loans and finance schemes for purchase of new and used cars. Banks and other financial institutions offer attractive loan products to those desirous of purchasing a vehicle for commercial use.
Here are some of the more popular loan products for taxi drivers:
About Loans for Taxi Drivers
Punjab & Sind Bank offers loans for all types of commercial vehicles subject to the condition that the concerned authority such as RTO must approve the purchase. Here are the details –
a. Businesses or individuals operating or proposing to operate vehicles to carry passengers or goods.
b. Borrower or drivers hired by him must have valid driving license.
c. Borrower should have documentary proof of permission by appropriate authority.
Loan repayment in EMI up to a maximum of 5 years exclusive of moratorium period.
Moratorium Period – Maximum 3 months from disbursement
No security for loan up to 10 lakhs
Loan up to 25 lakh – minimum 25% of amount sanctioned
Loan above 25 lakh – minimum 50% of amount sanctioned
Collateral exempted for loans under CGTMSE.
Guarantee of earning member of family
Guarantor exempt under CGTMSE if collateral is provided
Guarantor should have minimum net worth of 200% of loan amount and he should be reputed in the industry / market
Punjab National Bank provides loans to individuals or business owning or wanting to purchase vehicles for commercial use. The borrower must have a valid driving license and should purchase the vehicle in his own name. Loan may be granted for used vehicle provided it is not more than 3 years old.
A margin of 10% is applicable on loans for new vehicles above 25 thousand. For used vehicles, the margin is 25% of the depreciated value. Depreciation is calculated at 20% p.a. on the current market value of the vehicle.
The vehicle purchased will be hypothecated to the bank for the period of loan. For loans above 10 lakh additional security of guarantor is required. Additional collateral may be provided by way of mortgage of asset in lieu of guarantor.
No collateral is required for loans under CGTMSE,
Maximum repayment term is 60 months for taxi or car and 48 months for other vehicles. EMI will begin from the date on which the vehicle is put on the road or 2 months from disbursement whichever is earlier.
In case of used vehicles, the repayment term is subject to a maximum of 36 months.
An upfront processing fee of INR 270 is required for loans exceeding 25000 but below 2 lakh.
For loans above 2 lakh, processing fee is 1.25% of loan amount.
Similarly, documentation charges of INR 200 per lakh are payable for loan exceeding 2 lakhs.
Vijaya Bank offers loans to taxi drivers only under the CGTMSE scheme. The loan does not require any collateral or guarantor. However, the vehicle is to be hypothecated to the bank for the term of the loan.
The demand for taxis is on the rise and banks and other financial institutions offer various loans for taxi drivers in order to provide gainful employment for such individuals.
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