Nowadays, tractors and farming equipment units are quite expensive. When farmers need more than one equipment unit, it becomes challenging because of higher prices. If you compare the prices of various tractors used in agricultural farms, you will notice that the most advanced and latest models cost far more than expected.
However, many farmers still choose traditional tractors, as they are more efficient and productive in agricultural farms producing high-yielding crops. Therefore, farmers opt for advanced and more effective practices, even when paying more than expected.
The same happens when they want to purchase specialised equipment units, such as an automatic harvester, fruit, flower picking machine, etc. These are pricey because they are built on cutting-edge technologies. The companies that make the equipment typically have to import the components from other nations, forcing them to increase the price to such a high level. So, if a farmer wants to buy a tractor or any different agricultural equipment, they will be entitled to take a loan.
What is a tractor and farm equipment loan?
As the name suggests, a tractor and farm equipment loan is a loan you can take as a farmer or agricultural representative. You must ensure you can buy the tractor or other farm equipment for production and harvesting. The loan amount is granted when you show the creditor the lack of funds and your ability to repay the loan on time without being charged any late fees.
Not all creditors offer finance on tractors and agricultural equipment. As a result, you should know the companies or creditor forms you can approach for taking out a loan and purchasing all the necessary agricultural equipment on time. Besides, you should be aware of the hidden charges on agricultural loans because this fund is relatively new. You should be aware of all the possible terms and conditions to avoid any scam or excessive payment without reason.
How to choose the best creditor for a tractor and farm equipment loan?
As we discussed, many creditors offer agricultural tractor and equipment loans. However, you should contact a trustworthy creditor who will only charge you in line. Following are some ideas you should consider while looking through the possible creditors for your financial loan on agricultural equipment.
- Choose an experienced creditor.
You must choose a creditor with enough knowledge and experience in agricultural loans. Since a tractor and farm equipment loan is quite a new concept in India, it might be difficult to find a creditor who might have a partial idea about how these loans work. So, look for a firm with experience in dealing with agricultural finances for an extended period. At least 3–4 years of experience is recommended.
- Choose a creditor with a good market reputation.
Always look for a lender with a good reputation in the market. To avoid scams and fraud, this is one of the most essential factors. To make sure you are trusting a genuine creditor, do your research. Suppose you want to collaborate with an online creditor. You can quickly look through the comments and reviews to learn more about the work quality, flexibility and scalability opportunities, and several other parameters.
- Double-check the interest rates.
Always ask the creditor if you may prepay the entire balance. Understand the overall interest rate on the principal amount. You can avoid paying any other extra charges included in the initial contract but were not disclosed to you at the time and were added subsequently without prior notice by asking the creditor about these additional costs. Therefore, learning a little about the extra fees will help you understand the operation of the business and the benefits you will receive.
- Choose a licensed creditor.
Always choose a licensed creditor with a permit issued by the government for giving out loans on agricultural farm equipment and tractors. You can only settle down for any creditor with a permit or license, especially those having an expired license with no sign of renewal from the past years.
Note: Sometimes, the creditor can put an insurance cover on your tractor and farming equipment without letting you know. Any insurance cover will lead to a dramatic increase in the total instalment amount, which is why you should ask the person or the agent offering you the loan about any insurance cover present against it.
Top Things to Remember While Taking a Tractor and Farm Equipment Loan
- Since loans for agricultural equipment and tractor loans are uncommon, you might have to look for a genuine person to guide you.
- To obtain a tractor and farm equipment loan, always choose a lender who deals with various agricultural loans.
- Always ensure that the lender offers flexible repayment options like extending the loan amount. Also, check if you will be charged to foreclose the loan. Once the loan is settled, you won’t have to pay any further interest or principal monthly.
- Always discuss if you have to pay any other fees as well. To ensure that, read all the documents carefully. Sometimes the lender charges an extra due to a feature you didn’t have in the design or any product that performs differently than the expectations.
In this article, we have walked you through the five most important ways to choose a creditor for a tractor and farm equipment loan. With the help of the points discussed, you can make a perfect choice and collaborate with a creditor, offering flexibility and scalability in loan repayment attributes. Also, we have ended the article with the four most important factors that will help you to know more about agricultural equipment units and tractor loans. If you still have any further questions, you can easily connect with the experts at Piramal Finance.