Banks and financial institutions in the country offer tractor loans to individuals who wish to purchase new or pre-owned tractors at competitive interest rates that start at 9.00% p.a. Prospective tractor loan borrowers may also have to pay a processing fee of around 0.5% to 2% of the loan repayment term. Most lenders offer repayments terms of up to 7 years.
Compare Best Tractor Loans Interest Rates 2022
|State Bank of India
||9.00% p.a. - 10.25% p.a.
||Up to 100% finance
||Up to 5 years
||13% p.a. to 22% p.a.
||As per the lender’s terms and conditions
||Up to 5 years
||12.57% p.a. to 23.26% p.a.*
||Up to 90% finance
||12 months to 84 months
||17.50% p.a. to 20% p.a.
||Up to 90% finance
||Up to 60 months
||16% p.a. to 20% p.a.
||Up to 90% – 95% finance
||At the discretion of the bank
*Note: This rate was offered to customers between July 2021 and September 2021
State Bank of India New Tractor Loan Scheme
State Bank of India offers agricultural term loans to those who wish to purchase new tractors and related accessories. Individuals, groups of individuals, institutions, and organisations are eligible to avail this loan.
- To be eligible to borrow this loan, the prospective borrower will need to earn a regular income.
- A 15% margin is applicable.
- To borrow this loan, the borrower will need to hypothecate their tractor/accessories.
- The borrower will need to insure the tractor/accessories purchased after taking a loan.
- 0.5% of the loan amount is charged as the upfront fee by the lender.
ICICI Bank Tractor Loan
ICICI Bank offers a tractor loan to individuals who own agricultural loan. The prospective borrower’s agriculture income is taken into consideration to determine their eligibility. The applicant should have at least 3 acres of land to qualify for this loan.
- The lender charges a low rate of interest, with a processing fee of 4%.
- Non-mortgage loans are offered, as well.
- Flexible repayment options are offered to borrowers.
- 4.72% of the outstanding loan amount or outstanding interest for the unexpired loan tenure.
HDFC Bank Tractor Loans
HDFC Bank offers tractor loans to farmers and non-farmers to purchase new or pre-owned tractors. The lender charges an attractive rate of interest and approves tractor loans within 30 minutes.
- The lender offers an easy documentation process.
- Prospective borrowers can borrow up to 90% of the tractor’s price.
- The lender offers flexible repayment terms. Borrowers can repay their loans via post-dated cheques, ECS, SI, etc.
- Tractor loans from HDFC Bank can be availed with or without submitting collateral.
- To avail this loan, applicants have to be over the age of 18 years.
- Processing fee - 2% of the loan amount
- Preclosure charges - Up to 6% of the outstanding principal
Axis Bank Tractor Loans
Axis Bank offers tractor loans at attractive interest rates, with a host of benefits to the loan borrower. Prospective loan borrowers can opt for a repayment term of up to 5 years and repay their loans on a monthly, quarterly, or bi-annual basis.
- To borrow a tractor loan from Axis Bank, the applicant has to be over the age of 18 years.
- The maximum age of the loan applicant, as on the date of funding, should be 75 years.
- The loan applicant should have at least 3 acres of land.
- The lender offers a quick documentation process.
- To avail this loan, the vehicle that is purchased on loan will have to be hypothecated to the lender.
Magma Fincorp Tractor Loans
Magma Fincorp is a leading financial institution that offers loans for new and used tractors of all brands. The lender has a pan-India reach and offers loans to farmers who reside in Telangana, Andhra Pradesh, Maharashtra, Tamil Nadu, Punjab, Madhya Pradesh, Uttar Pradesh, Rajasthan, Kerala, Karnataka, Orissa, West Bengal, Bihar, Jharkhand, Haryana, Gujarat, etc.
- The lender offers loans to individuals who reside even in rural parts of India.
- The documentation process is simple and hassle-free.
- Borrowed loan can be repaid on a monthly, quarterly, or half-yearly basis.
- New loans are offered to customers who have already borrowed tractor loans from the lender without them having to submit their land holding documents.
- Borrowed loans can be foreclosed 6 months after the loan amount is disbursed.
- Preclosure charges - 5% of the outstanding principal
Eligibility Criteria to Avail Tractor Loans
A number of lenders offer tractor loans to farmers and non-farmers. The eligibility criteria that one will have to meet to avail a loan from the lender are as follows:
Eligibility Criteria for Farmers:
- Applicants will have to be over the age of 18 years.
- Maximum age, as on the date of funding, will have to be under 60 years.
- The applicant should have at least a minimum of 3 acres of agricultural land.
- The borrower should earn a minimum income of Rs.1 lakh per annum
Eligibility Criteria for Non-Farmers:
- The applicant has to be at least 18 years of age to avail a tractor loan.
- The maximum age of the applicant, as on the date of funding, will have to be 60 years.
- The minimum annual income of the applicant should be Rs.1,50,000.
- The applicant should mandatorily have a telephone line.
*Note: The eligibility criteria to avail a tractor loan will vary from lender to lender.
The various documents that you will need to submit to a lender before and after borrowing a tractor loan are as follows:
- Duly-filled application form
- 2 recent photographs of the borrower
- Signature verification proof – Borrowers can submit their driving licence, passport, PAN card, or bank’s verification
- Proof of residence
- Proof of identity
- Proof of landholding
- Constitutional documents
- Quotation of the tractor that is issued by the dealer
- Proof of landholding
- Land valuation report
- Duly-executed loan documents
- Original invoice that is issued by the dealer
- Title search report
- Mortgage deed (if applicable)
- Margin money receipt
- Comprehensive insurance
- Proof of acknowledgment from sub-registrar
Things to Consider When Borrowing a Tractor Loan
A few things that you should take into consideration if you are looking to borrow a tractor loan are as follows:
Rate of Interest: As a prospective borrower, one of the primary things that you should take into consideration if you are looking to borrow a tractor loan is the rate of interest that is charged by the lender for the loan. For tractor loans, the interest rate charged can be as low as 9.00% p.a. and can go up to 23.26% p.a., if not more. The interest rate will be decided by the lender based on a number of factors such as the loan amount chosen, loan tenure, your credit score, etc. Thus, ensure that you take the interest rate quoted by the lender into consideration before zeroing in on a particular loan. Borrowing a loan with a low interest rate will help you keep your overall repayment amount low.
Loan Tenure: For tractor loans, the maximum loan tenure that can be opted for is 84 months. Many lenders, however, will offer you a maximum repayment term of 5 years. If you opt for a short repayment term, your payable interest over the course of the loan repayment term will be low. However, you will need to repay a higher monthly installment/EMI to the lender. Thus, you should check the maximum loan tenure offered by the lender and your repayment capacity and choose a repayment term accordingly.
Other Charges: In addition to the interest rate, your lender may levy other charges such as the processing fee, pre-payment fee, delayed EMI payment penalty, documentation charges, etc. These charges can affect the cost of your loan. Thus, while you should opt for a loan for which you are charged a competitive rate of interest, it is also necessary to check the other charges associated with that loan.
Submitting Collateral: While some banks make it mandatory for the loan borrower to hypothecate their assets or submit collateral to avail the loan, a number of lenders give borrowers the choice to not submit any collateral, as well. Thus, make sure to keep this in mind and decide whether you would like to hypothecate your assets or not.
Margin: It is advisable to check the margin quoted by your lender before you borrow a tractor loan. In the case of tractor loans, most lenders only fund up to 90% of the price of the tractor. In this case, the remaining 10% will have to be paid by the borrower. If the lender quotes a higher margin, you will need to ensure that you have the required funds available with you to make the payment.
How to Apply for a Tractor Loan?
Tractor loan applicants can apply for a loan through online or offline channels. While a few lenders have begun to offer tractor loans online through their official websites to applicants, a number of banks and financial institutions make it mandatory for the applicant to visit the nearest branch of the lender to avail a loan.
Regardless of whether you choose to apply for the loan through online or offline channels, it is advisable to first familiarise yourself with the terms and conditions of the loan. Also, make sure to compare the particulars of multiple tractors loans before you decide which loan to apply for.
To apply for a tractor loan online, you will need to visit the official website of the lender, navigate to the respective product page, and click on ‘Apply Now’. You will then have to key in a few details such as your name, address, contact details, state and city that you reside in, etc., and submit the online form. A representative will then get in touch with you to take the process forward.
Alternatively, you can also directly visit the nearest branch of the lender with the required documents and apply for a loan through the lender’s branch. In this case, you will need to fill up the application form and submit it with the required documents at the branch.
FAQs on Tractor Loan
- Apart from the interest rate and the processing fee, what are some of the other charges that are levied by lenders for tractor loans?
Apart from the interest rate and processing fee, you may have to pay the following charges:
- Pre-payment fee
- Part-payment fee
- Duplicate No Due Certificate fee
- Duplicate amortization schedule charges
- Swapping charges
- Late payment fee
- Legal charges
- Loan cancellation charges
- Cheque bounce charges
- Account statement charges
- Foreclosure statement charges
- Are tractor loans borrowers required to submit collateral to avail the loan?
Yes, most lenders will require applicants to submit collateral or security when borrowing a tractor loan.
- Can I repay the loan before the specified due date?
Yes, most lenders will allow you to prepay and pre-close your loan before the completion of the loan tenure.
- What is the maximum loan amount that I can borrow to purchase a tractor?
Most banks and financial institutions offer between 80% to 95% of the tractor’s price as finance. The exact quantum of finance, however, will vary from lender to lender.
- What will happen if I don’t repay the loan installment within the due date?
If you don’t repay your loan installment within the specified due date, it is likely that your lender will levy a late payment fee. Further, skipping a repayment could affect your relationship with the lender and your CIBIL score, thus making it difficult for you to borrow a loan in the future.
A GST rate of 18% will be applicable on banking services and products from 01 July, 2017.