Car Loan for Farmers: A Complete Guide

Quick Summary:

• Car loans for farmers are necessary to get a car for mobility, convenience, or family requirements. 
• Car loans for farmers have more flexibility in tenure and repayment terms. 
• Farmers need to check the eligibility criteria and have essential documents like KYC, Aadhaar, PAN, and proof of identity and income ready for a smooth loan sanction. 
• Comparing your loan options, EMIs, and offers may help you get better deals.

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People commonly think of tractors, fertilisers and seeds when talking of farm investments; however, a car can be a game-changer for farmers. Like anyone else in the city, a car is equally resourceful in the everyday life of a farmer.

However, unlike salaried individuals who have regular payment cycles, farmers must contend with unpredictable crop yields, seasonal income fluctuations, and limited documentation. This is exactly where a specially designed car loan for farmers comes in handy. 

What is a Car Loan for Farmers?

A car loan for farmers is a specialized financing product designed to help agricultural professionals purchase vehicles for personal or farm-related use. These loans, covering a variety of vehicles, offer a list of attractive features, like competitive interest rates, quick disbursal, flexible repayment options, and much more.

Here is how Mahindra Finance car loans for agriculturists can empower farmers to own vehicles, without straining their finances.

Minimal Documentation

One of the primary concerns for farmers looking to purchase a car is the lack of sufficient credit options. To secure the same, you often need to go through the paperwork hassle. However, farmers’ car loans make it easy for you. 

Multiple Repayment Options

Multiple repayment options are available for car loans. This way, farmers can align EMIs repayments with their income cycle and can conveniently pay online, via cheque or even in cash.

Attractive Interest Rates

Another prominent benefit of these farmers’ car loans is their competitive interest rates. Furthermore, for used car loans, the EMIs can be comparatively lower.

Did you know, Mahindra Finance new car loans are not just affordable but also come with up to 100% ex-showroom funding? 

Flexible Loan Terms

EMI management and repayment become easy with Mahindra Finance’s flexible loan terms that are available up to 5 years.

Did you know? The loan repayment tenure for used cars can be extended up to 72 months with Mahindra Finance. 

Why Do Farmers Need Car Loans?

A vehicle is more than just convenience; it’s a tool for productivity. For farmers, it empowers them economically and offers a variety of advantages. Here’s how: 

1. Save Money on Supplies: You can drive to bigger city markets to buy seeds, fertilizers, and equipment at lower prices, reducing your overall farming costs.
2. Reduce Spoilage: Quickly transport smaller batches of high-value produce like fresh vegetables and fruits to the market, ensuring they don’t spoil while waiting for a large truck.
3. Access to Knowledge: Easily visit agricultural centers (Krishi Vigyan Kendras) or attend workshops to learn about new farming techniques that can increase your yield.

Takeaway: A car loan can be a way to improve farmers’ productivity, convenience, and much more.

How to Qualify for a Car Loan as a Farmer?

The application and eligibility requirements for a car loan may differ from bank to bank and from one lender to another. However, here are some requirements you might need to know. 

Qualifying Age

Typically, car loans are available for individuals aged 21 to 60 years old to apply for car insurance.

Keep Paperwork in Order

When applying for a loan, keep all your essential documents handy, as they can ensure a smooth loan process. The following documents would be required:

• KYC documents: Aadhaar, PAN, or passport.
• Income proof: Bank statements showing income from mandi sales, IT returns
• Identity and address proof: Rental agreements, utility bills, etc.
• Co-applicant or guarantor documents, if any.
• Quotations from your car dealer, including taxes, on-road price, and relevant details. 
• Credit history.

Types of Car Loans Available for Farmers

Here are some common types of loan options you might explore when planning to buy a car.

Secured Car Loans

In a secured loan, the car itself acts as the collateral or security for the loan. Typically, it offers advantages such as competitive interest rates, longer tenures, and other favourable terms. If the borrower is unable to repay the loan, the lender has the right to repossess the vehicle.

Unsecured Car Loans

Farmers can also buy a new or used car with unsecured car loans. Typically, such loans rely on your creditworthiness and are suitable for smaller amounts. However, the interest rates can be comparatively higher.

Loan Against Car

Mahindra Finance also offers a Loan Against Car. With this facility, you can borrow against vehicles with up to 95% of their worth. These come with several benefits, including competitive interest rates, fast disbursal, and multiple loan tenure options to choose from.

Where Farmers Can Apply for Car Loans

Planning to apply for a car loan for farmers? Here are some options you might explore.

NBFCs

Non-banking Finance Companies can offer a wide range of loan facilities. Mahindra Finance car loans are designed to accommodate individuals with different requirements and income levels. Plus, the loans are approved quickly with minimal documentation. 

Banks

Several public sector/ cooperative banks offer a variety of farmer-friendly schemes that are available at low interest rates. However, bear in mind that you will have to undergo stringent checks and procedures.

Primary Agricultural Credit Societies (PACS)

Some PACS also provide car loans to their members. However, you might need to become a union member to avail loans.

Suggested Read: 5 Important Things To Consider Before Applying For A Car Loan

Steps to Apply for a Car Loan

Applying for a car loan, finding the right lender, checking interest rates, gathering essential documents, and obtaining approval can feel overwhelming. But when you follow the right steps, the car loan process can be smooth.

Here is your step-by-step simplified guide. 

Keep the Paperwork Ready

Before applying, make sure you have all the essential documents ready. This not only simplifies and expedites the loan application process but also reduces your chances of loan rejection.

Check for Loan Offers

Check for the interest rate, processing fees, insurance charges, hidden fees, and more. 

Pro Tip: Use the Mahindra Finance car loan EMI calculator to get a fair estimate of your EMI amounts. The self-illustrated tool helps you correctly plan your EMIs.

Do not ignore the Terms and Conditions

Carefully read the loan document. Be very clear with repayments, penalties, loan tenure, and other details related to the loan application. 

Submit Your Application

Once you are done checking the details, apply online. For instance, with Mahindra Finance, initially, you simply need to provide your contact details. The other details are then collected through a callback. After that comes the document verification, and with everything done right, your loan is sanctioned in no time.

Tips for Getting the Best Car Loan Rates

Here are some easy tips and ideas to secure the best car loan rates.

• By paying your existing loans on time, you can build a good credit score. This reflects positively on your creditworthiness, improving your chances of successful loan approval. 

• If you are eligible, you can look for state governments and NABARD schemes that offer subsidised loans.

• Choose your loan tenure wisely. Generally, a shorter tenure might increase your EMIs, but your total interest is reduced in the long run. Balance your finances according to your income and requirements.
• Utilise the Mahindra Finance car loan calculator to make a well-thought-out decision.

Mistakes to Avoid When Getting a Car Loan

Here are some mistakes to avoid when applying for a car loan. 

Simply focusing on your EMIs

Instead, look for EMIs and total interest to balance wisely.

Ignoring the insurance costs.

Motor insurance is mandatory for all vehicles. Make sure to count in insurance expenses also. 

Not Reading the Fine Print.

Pay careful attention to costs like processing fees and any other hidden charges.

Borrowing Beyond Capacity

Choose an EMI amount that is convenient and payable even during lean seasons.

Conclusion

Buying a car can be a life-changing financial step for farmers. It can bring opportunities, freedom, time management and much more. However,  as a farmer, you must carefully evaluate eligibility, loan terms, and repayment options before committing.

Borrow wisely.

FAQs On Car Loan for Farmers

Q1. What documents are needed for farmers to apply for a car loan?

Common documents needed for farmers to apply for a car loan include Aadhaar, PAN, income and identity proof, bank account details, and other KYC documents. However, the paperwork may differ from one lender to another. 

Q2. Are there any specific car loan grants or subsidies available for farmers?

Under certain NABARD-linked or state schemes, farmers may get interest subventions or relaxed repayment terms.

Q3. Can a car loan be used to purchase farming equipment instead of a vehicle?

Typically, no. Car loans are strictly designed to purchase new or used cars. At Mahindra Finance, we offer various loan options, including Machinery loans, Tractor loans, and Utility Vehicle loans, to cater to all your financial requirements.