Four Step Guide to Buy a Tractor Loan

India is known as an agrarian country. Farming is the primary occupation of majority of Indians in the country. From a long time, this occupation has been carried out using ploughs and bullocks. However, the productivity obtained using them is not appreciable.

Tractors are helpful in simplifying the farming process and improving the productivity. However, these machines are not affordable for every farm owner. To realize their dream of owning a tractor and multiplying agricultural output, several banks and NBFCs have launched flexible tractor loans. Such a borrowing can be obtained in the following few steps.

Find a Financer

Finding a financier can be a taxing task, especially when the numbers of offerings vary according to different financial institutions. In order to find the best financier that perfectly suits your tractor financing needs, read the loan offer documentation of various financial institutions.

Check the Interest Rates

Interest rates of the loans will vary according to the type of borrowing. A standard tractor loan is available at around 16% to 20%. The rate of interest will depend on various factors that include the principal amount of borrowing, proposed tenure of loan, and several other factors.

Scan through the documents required

A list of key documents required to sanction a loan will almost be the same for most of the financiers. Some of the key documents required to avail a loan include-

  • Land ownership documents
  • Encumbrance certification to verify hypothecation.
  • KYC documents – name, age, address, date of birth.
  • Guarantors KYC and land ownership documents

Check Provision of Foreclosure

Many people do not like their tractors to be under the shadow of debt for a long time. As a result, they may look for options to foreclose the loan before the expiry date.

  • Generally, loan foreclosure is allowed after 6 months from loan commencement.
  • Additional fee of 5% will be charged on the outstanding loan amount.