The Reality of Used Commercial Vehicle Financing

In the commercial vehicle (CV) financing market, Non-Banking Financial Companies (NBFCs) currently command a 64% share. Unlike the “two-minute” or “five-minute” approvals common in car or two-wheeler financing, used CV lenders are opting for a measured, “morning-to-evening” turnaround. The pace may seem slow, but it reflects the complex realities of assessing second-hand trucks.

Why Used Trucks Require Time

Financing a used truck is inherently challenging. Unlike new vehicles, these trucks require a detailed physical appraisal to determine earning potential. Lenders must check engine condition, usage history, and a large volume of paperwork. K. Vasumathi Devi, Managing Director at IKF Finance, highlighted that while two-minute approvals are unrealistic, a few hours may eventually allow a customer to pick up a vehicle in the morning and start using it by evening.

Digital Roadblocks in Financing

The government’s Vahan database has improved transparency, but coverage is uneven, and lenders often rely on paper documentation in some regions. Rajendra Kumar Sethia, MD and CEO of SK Finance, explained that collateral-based loans demand more than a credit score—they require assessing the borrower’s ability to generate income from the vehicle. This involves deep engagement with “Middle Bharat,” where relationship-driven lending is essential.

NBFCs’ Strategic Approach

Despite the challenges, the used CV market remains a strategic anchor for NBFCs. Affordable used vehicles offer faster break-even for small operators, forming the backbone of India’s logistics ecosystem. While staff attrition and operational hurdles persist, firms are increasingly using machine learning and automation to streamline processes. The aim is not ultra-fast approvals but ensuring truckers can start earning the same day, blending technology with practical experience.