A tractor is a necessity to start and run an agricultural business. Though the markets are full of feature-packed and technologically advanced tractors, getting your hands on the tractor of your choice can be an expensive affair. But not with a tractor loan!
A lot of lenders, such as Mahindra Finance, offer tractor loans to farmers to help them kick-start their agricultural business. As far as tractor financing rates are concerned, nowadays, lenders offer affordable tractor loans to make it easy for you to purchase your preferred tractor. You need to consider whether to get a tractor loan from a bank or an NBFC. As far as the banks are concerned, the rates might be cheaper, but the process is stringent. For NBFC, the process might be lenient, but the rates might be slightly higher. Although the higher tractor financing rate will not matter much, it is imperative to select the right partner for your loans.
1. Application form
3. Identification proof like Aadhaar card, PAN card, driving license, etc.
4. Residence proof
5. Landholding proof
6. Income proof
7. Land valuation report
8. Tractor quotation
Things to consider while applying for a tractor loan
1. Interest Rate
The tractor financing rate varies from 9% to 23%. Therefore, it is vital that you lock in the price at the lower end of the spectrum to save on interest costs. Interest rate also depends on a variety of factors like the tractor model, loan amount, loan tenure, CIBIL score, land valuation report, etc.
2. Loan Tenure
In most cases, the loan tenure is five years or 60 months. Ideally, you should try and pay the loan as soon as possible to save on the interest amount. A 5-year loan is considered an ideal choice as the rate of interest is not very high.
3. Other Charges
The tractor financing rate is not the only charge you have to pay. Other charges such as the processing fee, prepayment fee, delayed EMI payment charges, and documentation charges should also be considered while applying for a tractor loan.
It is not mandatory to submit collateral. Some lenders make it compulsory for you to keep some collateral. You should check with the lender whether collateral is necessary or not. But your tractor will need to be hypothecated as well.
5. Margin Required
The minimum margin required by most financing institutions is 15%. But you should check with the lender to know the exact percentage required. The tractor down payment required should be checked with the lender to know if you have the amount.
How to apply for a tractor loan?
You can contact the lender through offline channels or apply for a tractor loan online. The tractor financing rate does not depend on whether you approach through offline or online channels. If you want quick disbursal of your loan amount (within two days of approval), you can check out Mahindra Finance tractor loans as well. They allow flexible loan repayment plans along with loans on a wide range of tractors. The documentation is easy and flexible as per your requirements.