How to Choose the Right Tractor Loan and Manage Your EMI Easily?

A tractor is a basic necessity for farmers, and choosing the right one is important. From the beginning of the land preparation to harvesting, the tractor plays a vital role. Also, buying it is the biggest investment for a farmer. Paying the complete amount of tractor in one go is next to impossible sometimes. Thus, for a smooth payment, you should go for a tractor loan.

To remove the burden from your shoulders, you should purchase the right tractor with proper planning. Also, going through the loan process and managing your EMIs systematically is equally important. This article helps you to understand the right way to get a loan and repay the amount of EMI comfortably. 

Top 7 Tips to Select the Right Tractor Loan and Handle EMI 

The first question that a farmer should ask themselves before choosing a loan is what is the measurement of their land? What type of crops do they want to grow? After getting answer of these questions, they can go for a loan. The article gives the detail knowledge on the loan selection, EMI payments, and common errors that they should avoid: 

1. Check out the Eligibility Criteria 

At the time of choosing the loan, every bank has its own eligibility criteria. Your age, proof of land, income source, CIBIL scores, credit payment history, etc., everything will be considered. You should check out the eligibility requirements before applying for the loan. That can help you to save your time and chances of getting your loan approved. 

In case you ignore the minimum eligibility, it will result in application rejection, which negatively impacts your credit scores. That’s why it is suggested to read about the document requirements and prepare it beforehand.

2. Compare Interest Rates 

To compare the interest rates, you should check out different banks, such as public sector banks, private banks, rural banks, and tractor finance companies. Then, check out the percentage of interest rate in each of them, and choose the best. Even a 1 to 2% of lesser interest rates can save a significant loan amount. Also, while checking out the interest rate, you should check if it is a fixed interest rate or a floating interest rate. 

3. EMI amount with the EMI Calculator

You can check out your per-month EMI with the help of the EMI calculator. To know your exact amount of interest and EMI, you need to enter the required information. The details are loan tenure, loan amount, and interest rates. After that, you will get an exact amount of how much you need to pay every month.

For calculating your EMI, there are several websites, such as Tractor Junction, among others. You can go to the website, click on the tractor EMI calculator option for loan planning.

4. Down Payment Options 

The financers provide different down payment options. Also, you can choose the down payment amount according to your convenience. The suggestion is that you should choose the higher down payment option. Because it reduces the EMI options, lowers the loan amount, and places less interest burden. 

5. Government Subsidy Scheme 

The central and state government offers different types of subsidies to farmers for their farm machinery. These subsidies help farmers to get a lower cost on tractors and reduce their loan burden. Check out the names of some of the government-provided subsidy schemes for the farms:  

• Sub-Mission on Agricultural Mechanization (SMAM) (provides 40% to 80% subsidies). 
• Pradhan Mantri Kisan Samman Nidhi PM-Kisan Services (helps to procure inputs for crop health)
• e-Kisan Upaj Nidhi (for post-harvest loans), etc. 

6. Apply for Insurance

Insurance of your tractor is as important as the loan payment. Some of the farmers did not consider buying insurance, as they take it as an extra expenditure of money. However, it covers your tractor if it gets damaged or stolen. Even some of the insurance companies provide the insurance amount in the case of Natural disasters.

7. Go for Second-Hand Tractors 

To reduce the financial burden, a farmer can choose pre-owned tractors. Also, many of the banks and Non-Banking Financial Company provides the loan on pre-owned tractors. For planning the second-hand tractor, you should check its condition and the engine first. If you take the loan on these tractors, your EMI automatically reduces because of the lower principal amount. 

Summing-Up 

A farmer can choose a suitable tractor loan after calculating different parameters. These careful considerations are interest rate comparison, budget, per-month EMI cost, government subsidies, and repayment strategy. Also, according to the budget, farmers can choose either a new tractor or a pre-owned one.