Agricultural term loans are generally sanctioned for purchase of new tractors, accessories and implements used for the industry, mainly by farmers. However, tractor loans, in particular, can be Eligibility for used by individuals or a group of farmers to purchase a tractor and pay it off together in a case in a group or individually through EMIs. This is generally a Secured Loan like any other car loan, i.e. in case of failure of payments the tractor will be taken away from the loan seekers or individuals.
Eligibility criteria for Tractor Loan
Banks have different eligibility criteria for tractor loans but here are the most common ones:
- Any individual or group of individuals which includes JLGs/SHGs, institution or organization are eligible.
- They must have sufficient income to able to repay the loan.
- Ideally borrower or the borrowing body should possess a minimum land holding of 2 Acres.
Features for Tractor Loans to Look Out For
- The margin percentage is important to note, which in most cases start from 15%.
- Primary security of the loan is the hypothecation of Tractor and its accessories.
- Insurance must be taken for the tractor with the same or any other bank as it is an automobile and in India, it is mandatory for all automobile owners to have an insurance.
- There may also be a collateral security which may be a mortgage of landed property valued equivalent of 100% of loan value.
Financial Specifics of the Tractor Loan
- The interest payable on the tractor loan amount is generally 12% per annum or more.
- People who are able to repay punctually can even sometimes further concessions such as State Bank of India gives a further concession of interest @1.00% by way incentive will be extended to the borrower and 0.50% to the tractor dealer as a reward to prompt payments.
- Upfront fees may include 0.5% of loan amount.
- Repayment is calculated in the form of monthly installments.
- Loan is repayable in equated monthly installments generally for a period of 5 years that includes a grace period of 1 month.
- Post-dated cheques is also an option for repayment.
- For example, if the tractor loan amount is Rs 1 lakh the EMI would come to around Rs 2,225.
