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About Loans for Taxi Drivers

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:

Loans For Taxi Drivers
Loans for Taxi Drivers

Commercial Vehicle Scheme from Punjab & Sind Bank

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 –

PurposeFor purchase of any vehicle subject to approval by concerned authority.

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.

Quantum of Finance80% of the cost of vehicle + One time registration, road tax, and insurance subject to a maximum of 2 crores
Margin20% margin on cost of vehicle
DSCRMinimum Net DSCR (debt service coverage ratio) requirement shall be 1.25:1
Rate of InterestPlease visit bank website.
Processing FeePlease visit bank website.
Repayment of Loan

Loan repayment in EMI up to a maximum of 5 years exclusive of moratorium period.

Moratorium Period – Maximum 3 months from disbursement

Primary SecurityHypothecation of the vehicle to be purchased.
Collateral Security

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

Prepayment ChargesBorrower may prepay the loan with no charges except in case where repayment is made by taking another loan. In such cases, a penalty of 1% is applicable.
Penal InterestPenal interest of 2% applicable in case of default in schedule.

Punjab National Bank (PNB) – Vehicle Loans

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 V Cab Scheme

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.

PurposeTo purchase car/s to be engaged with ‘Ola Cabs’ for passenger transportation.
EligibilityIndividual drivers having valid driving license and aged between 18-45 years and Transport operators identified by OLA.
Nature of facilityTerm loan
Quantum of Loan Maximum Rs.10.00 lakhs.
Margin10% of on the Road price.
Rate of interestPlease visit bank website
GuarantorNo guarantee is required. However, loans are to be covered under credit guarantee scheme(CGTMSE)
SecurityHypothecation of vehicle/s to be purchased out of bank finance.
Processing ChargesNo processing/documentation charges.
RepaymentMaximum of 84 months in equated monthly installments

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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