Tractor Loan for Farmers
Tractor Loan for Farmers
An integral part of any farming activity is the usage of tractors. Tractors are needed for various purposes for maintaining the land and making it agro-friendly. Due to its multiple usages, every farmer requires a tractor on his farm. However, due to the high cost of a tractor, every farmer cannot afford to buy with his money. Therefore, several banks and money-lending agencies provide farm tractor loans to support the purchase of tractors. If you need to know the details of the farm tractor loans, this content will give you all the information on tractor loans.
Eligibility criteria for tractor loans
Several money lenders provide tractor loans to the applicant if they are deemed eligible for it. Applicants can be both farmers and non-farmers. The eligibility criteria for farmers and non-farmers include:
- Eligibility criteria for tractor loan for farmers
- The applicant has to be above 18 years of age.
- The maximum age of the applicant has to be under 60 years.
- The applicant must have at least 3 acres of farming land.
- The applicant must have a minimum of Rs 1 lakh income per annum.
- Eligibility criteria for tractor loan for non-farmers
- The applicant must be between 18 years and 60 years of age.
- The minimum income of the applicant should be Rs. 1.5 lakhs per annum.
- The applicant must have a telephone line.
It is important to note that the eligibility criteria for farm tractor loans vary from lender to lender.
Things to consider before applying for farm tractor loans
Before you apply for a tractor loan, you need to consider the following points:
- Rate of interest: Before you proceed with your application, you must know the rate of interest that your lender is charging for both new and used farm tractor financing. The interest charges can be as low as 12% and as high as 26%. The interest rates are decided by the lender depending on your credit score, tenure of the loan, loan amount applied for. Opting for a small loan amount will help you in the overall repayment process. Therefore, decide on a flexible and feasible interest rate, so you do not face any problem in the future.
- The tenure of the loan: The loan tenure is another consideration that you need to make before going for a proper tractor loan plan. The maximum loan tenure that is available is 84 months, although most lenders offer repayment terms of 5 years. Shorter the repayment tenure, the lesser interest you have to pay, although the monthly repayment amount will be higher. Consider these following points and choose your loan scheme accordingly.
- Additional charges: In addition to the interest charges, the lender can add extra costs like processing fee, delayed EMI payment penalty, pre-payment fee, documentation charges, etc. which will add on to your loan amount. Check whether these extra charges are feasible to you or not.
- Submitting collaterals: Certain banks have made it mandatory for the borrowers to hypothecate their assets or submit their collaterals to avail the tractor loan. However, other banks do not ask for such guarantees. Therefore, decide on whether you wish to hypothecate your asset to the moneylender or not.
- Margin of the loan: It is also essential for you to check the margin of the expenditure that is covered by the loan. Most lenders provide funds up to 90% of the tractor cost, which means that the borrowers have to take care of the remaining 10% o the cost. Therefore, you need to ensure that you have the additional funds available to make the purchase.
How to apply for a tractor loan
Tractor loans can be applied for both online and offline. If you choose the offline mode, you need to prepare all the necessary documents, visit the moneylender of your choice, get the documents verified, and make the application. The moneylender will take you through the entire process and sanction your application once the rest of the steps are completed. If you want to go for the online mode, you have to visit the official website of your moneylender, scan and upload all the required documents, fill in all the steps, and submit your application. Once all the steps are verified, your application will be acknowledged, and you will get your loan.
Several banks provide loans for buying tractors. Let us discuss some of them, along with their specifications and benefits.
SBI New Tractor Loan Schemes
State Bank of India provides loans for buying tractors to individuals, groups, organizations, and institutions. The benefits of the loan include:
- The prospective borrower has to show that they have a regular income.
- A 15% margin has been made applicable.
- The borrower needs to hypothecate their tractor and accessories to the bank.
- The borrower had to get their tractors and accessories insured after taking the loan.
- The lender charges 0.5% of the loan amount as the upfront fee.
ICICI Bank Tractor Loans
ICICI bank provides tractor loans to individuals who also owns an agricultural loan. They consider the farm income of the individuals while determining their eligibility. The applicant also needs to have 3 acres of land to be eligible for the loan.
The key specifications and benefits of the loan are:
- The bank charges a low processing fee and a flat rate of interest.
- The bank also provides loans without any mortgages.
- Repayment options offered to the applicants are flexible.
- The processing time for a loan application is less.
HDFC Bank Tractor Loans
HDFC bank also offers tractor loans to both farmers and non-farmers to help them in the purchase of new or pre-owned tractors. The bank provides an attractive rate of interest, and the loan approval process takes place within 30 minutes.
The key specifications and benefits include:
- The documentation process is easy.
- The applicant can borrow up to 90% of the total tractor price.
- The repayment terms are flexible and can be done by ECS, post-dated cheques, SI, etc.
- The applicant may or may not submit collateral for availing the loan.
- The applicant must be above eighteen years to be eligible for the loan application.
These are some of the general descriptions associated with tractor loans with a few examples. Please look into the details and make a wise decision.