Personal Loan

Benefits of Taking a Loan to Buy a Tractor in India


Tractor loans for farmers are the industry standard for agricultural machinery in India. Tractor finance in business and industries is a need. Hence, top banks offer tractor loans. The demand for tractor finance is highest in the country’s rural and semi-urban areas. 

Tractor loans help you buy new or old tractors. These tractors have a wide range of applications in industry and agriculture. Farmers must have at least three acres of land to qualify for a tractor loan. But, this number varies lender by lender.

This article will highlight some benefits of applying for a tractor loan for farmers in India.

Benefits of Taking Out a Tractor Loan in India

Better productivity

A tractor can make you more productive. And, due to the increased productivity, you will have more time to devote to each task. Also, a tractor outfitted with a cultivator, rotavator, sprayer, and thresher is handy. It makes farming far more efficient than using farm animals. It also speeds up the process. Hence, you can make the most of your time.

Cut the cost of production

The level of automation in a farm directly impacts crop harvest. Investing in a tractor can save 15–20% on seed and fertilizer costs. That’s because of the increased accuracy it provides. 

You’ll feel confident about farming again. That’s because tractors make tillage, sowing, inter-row crop cultivation, and harvesting easier. 

Together, these factors allow for a higher level of cropping intensity. Which, in turn, yields greater yields. Hence, we recommend applying for a tractor loan. Finally, it can help you cut down on production costs.

Increase land cultivability

Farmers in hilly areas know how labour-intensive it is to cultivate their produce. They frequently give up and give in. A piece of farm automation equipment, like a tractor, can be quite helpful in this situation. 

The innovative techniques used by tractors save time and effort. Hence, they allow you to transform the unusable area into productive farmland. And, help you to increase your earnings during harvests.


A tractor is very comfortable and convenient. And, due to the robust hydraulics, they can lift harvests weighing up to 1500 kgs. Also, investing in a tractor can make large-scale fieldwork much easier. 

Make your selection from the available options

There is a diverse selection of tractors available. You can choose from over 16 a handful of national and international brands. So, it doesn’t matter if you have a tiny orchard or a sprawling farm; you have options. 

You won’t be disappointed if you buy a tractor with a tractor loan. Suppose you’re looking to improve your output on the farm. In that case, a tractor is your best bet.

Important Things to Think About When Applying for a Tractor Loan

There are several things to think about before applying for a tractor loan.

Interest Rate

The interest rate charged by the lender is a primary factor. The APR on tractor loans can be anything between 10.55 and 23.95 %. The interest rate is determined by the lender based on several factors. For example, the loan amount, the loan term, and others. Borrowing money at a low-interest rate will reduce your monthly outlay.


The longest possible loan period for tractors is 7 years. In contrast, some lenders only allow a maximum payback time of 5 years. Suppose you choose a shorter repayment period. In that case, you will pay less interest. But, your monthly EMI payments will be higher. To that end, you should think about the following:

  • How long can you afford to pay the loan back
  • How long will the lender let you have the loan
  • Repayment period

Extra Costs

Various costs can be added to your loan amount. For example: 

  • Processing fees
  • Prepayment fees
  • Documentation charges

Thus, look for a loan with a good interest rate and consider the costs involved.


The lender you choose to borrow from will determine if the collateral is required. Thus, it is important to read the fine print before giving a loan the green light.


When applying for a tractor loan, verify the margin your lender has offered. The average loan amount offered by lenders is 90% of the price of the tractor. Hence, you must pay the remaining 10%. 

If the lender gives a higher margin, you should ensure that you have the funds to make timely payments.

Loan Rates for Tractors

Tractor loan interest rates in India can vary widely based on certain criteria. For example:

  • Type of loan
  • The creditor
  • The individual’s credit score
  • The amount of the down payment

But generally speaking, the interest rate for a tractor loan is around 10% to 12%. In India, you can take out tractor loans for short or long periods. Loans with terms longer than 3 years are long-term. In contrast, those with less than 3 are short-term.

The lending institution sets the interest rate for tractor loans in India. But, interest rates offered to vary from lender to lender. 

The applicant’s credit rating also plays a significant role in the interest rate. Interest rates are inversely proportional to credit scores. So, the higher the credit score, the lower the interest.

Last but not least, the interest rate on tractor loans also depends on the down payment. When the down payment is high, the interest is low. And, when the down payment is low, the interest is high.


Borrowing money is typically the only option for Indian farmers who want to buy a tractor. In this article, we discussed tractor loans for farmers in detail. Using this data, securing the loan necessary to buy your dream tractor should be much simpler.

Want an instant personal loan? Apply for a personal loan with Piramal Finance right now!