A good e-rickshaw finance company can help reduce the purchase cost by structured loan but the terms can be different from one lender to another. The financing option for e-rickshaw could be through banks, NBFCs, vehicle-finance companies or even dealer-linked partners based on the vehicle, location and borrower’s loan eligibility. It is important to understand the available lenders, loan eligibility, documents needed, down payment, interest rate, EMI, loan period and other charges before choosing an option.
There is no one lender that offers the e-rickshaw buyer the same terms. It can depend on your location, which vehicle model you pick, the dealer options, your own profile and the company policy.
A good list of e-rickshaw finance company could include those that offer loans for electric 3-wheelers.
Mahindra Finance: Three Wheeler Loan for Electric Rickshaws – Covers personal or commercial use with a loan period of 12–42 months.
Shriram Finance: Electric Three Wheeler Loan. This offers financing up to 95% for new vehicles and up to 90% for used vehicles. The loan period can go up to 48 months.
Dealer-linked finance: E-rickshaw dealers can work with finance partners so that when a buyer visits the dealer they can be provided with finance options at the time of the vehicle purchase.
Bank or NBFC options: This depends on the category of the vehicle, the availability of finance provider in your area, your own profile as the borrower and the lending policy of the financer.
When an e-rickshaw finance company considers a loan they look beyond the vehicle's specifications and check the borrower's financial details. Shriram Finance considers credit history, income, down payment, debt/income ratio, the loan-to-value of the vehicle and the value of the vehicle itself.
The following are the basic steps:
Select the vehicle: Choose the model and check the invoice price of the vehicle.
Calculate the margin: Calculate how much you can pay as a down payment.
Submit details: Submit details about who you are, where you live, how much you earn and what vehicle you want to buy.
Credit assessment: The load provider checks your profile and ability to repay the loan.
Loan decision: The financer shares the approved loan amount, interest rate, tenure and any additional costs.
Documentation requirements can be different across finance providers, so buyers must check the exact document list before applying for a loan. Shriram Finance currently asks for identity proof, address proof, income documents with the related vehicle documents for getting a loan against their electric three-wheeler.
Among the most common documents asked for are:
Identity proof: Includes Aadhaar Card, Passport or Driving Licence.
Address proof: Includes Aadhaar, utility bill, Passport or another valid address document.
Income proof: Recent bank statements, ITR or other relevant business documents.
Vehicle papers: Pro forma invoice for a new vehicle or ownership documents for a used vehicle.
Photographs: Recent passport-sized photographs can be needed for loan processing.
Bank details: Your account details can be requested for loan processing or repayment.
These are the important documents every buyer should have when applying to an e-rickshaw finance company.
The size of a down payment is decided by the financer loan-to-value policy, the value of the vehicle purchased and your borrower profile. A larger down payment can reduce the loan amount which can lower the EMI and total interest paid.
An e-rickshaw finance company may finance a different percentage of the vehicle cost based on its loan-to-value policy and the applicant’s profile.
The above example shows that Shriram Finance offers to finance 95% of the value of a new electric three-wheeler. This means that the customer would be required to pay the remaining amount, apart from applicable charges and this also depends on the profile of the applicant.
The customer must ask for a clear breakdown of the down payment that needs to be made:
Down payment: The exact amount that the borrower needs to arrange.
Loan amount: Confirm the amount that the lender will finance.
Processing fee: Ask whether this fee applies as a separate amount.
Total repayment: Compare the total amount you will pay across different repayment periods.
An e-rickshaw finance company usually calculates EMI from the loan amount, interest rate and loan period. A longer EMI plan can reduce the monthly EMI but can increase the total interest to be paid over the full loan period.
Let's suppose a buyer takes a loan of ₹1,00,000 at an annual interest rate of 12% for 36 months. The EMI would be roughly ₹3,321 under a standard reducing balance method. The actual loan calculation can be different depending on its interest calculation method and other charges.
Before accepting an offer, ask the e-rickshaw finance company for the complete EMI schedule so you know the total repayment amount.
Do not compare loans only by monthly EMI. A lower EMI can come from a longer payment time, so always compare the total amount payable.
While choosing an e-rickshaw finance company one should consider many other factors. For example, two loans can have the same interest rate but they can have different processing fees, repayment time, insurance and repayment terms.
The following points should be checked and compared before choosing a loan with any financial institution:
Interest rate: Ask if the mentioned rate is fixed or floating.
Loan tenure: Decide between 24, 36, 48 or any other loan period.
Processing fee: Know the processing fee and applicable taxes.
Late payment charge: In case you miss a payment or a month, ask about the penalty for a late EMI payment.
Loan-to-value: Learn about the percentage of the vehicle value that the company will finance.
Total payable: Compare your first installment with the total amount you will pay to the financer, including the interest and other charges.
Hypothecation: Ask about when the financer name or charge on your vehicle will be removed.
Choosing an e-rickshaw finance company should depend on the total cost of the loan, not only on the initial loan amount or EMI. Current loan provider terms show that financing can change greatly in loan-to-value ratios, pay duration, interest rate and charges. For instance, Shriram Finance advertises up to 95% financing for new electric three-wheelers with a loan period of up to 48 months while Mahindra Finance lists financing for electric e-rickshaws with duration of 12–42 months. So, compare the sanctioned amount, down payment, interest, processing and loan closure charges and choose a repayment plan that fits your monthly income.
