All you need to know about machinery loan interest rate

Dec 22, 2022

4 min. Read


Authored By: L&T Finance

All you need to know about machinery loan interest rateFarm Equipment Loan

All You Need To Know About Machinery Loan Interest Rate

If you are a farmer who works with agricultural equipment, you need to read this article till the end. As a farmer, you understand the importance of machinery, yet you are forced to cut down on the cost of machines because you have limited capital. What if there was a facility that could help you borrow funds to either buy, lease, or even repair and upgrade your machines? Yes, you read that right! That is exactly what is machinery loan.

This loan helps you increase productivity and improve the efficiency of your business without hurting your working capital. Machinery loan in India is a boon for farmers as it takes a huge burden off their shoulders. It is the greatest aid that new and old farmers can expect to get financial help from. Don't believe us? Consider the case of Ramesh. Ramesh is a farmer who grows soybeans. He receives tons of orders for soybeans, however, the orders are always delayed because he has no machine for threshing. He has employed manual labor and has had to pay the employees by the hour. Not only was this slow but he was incurring a lot of losses since most of the money was going toward paying her employees. When his son suggested buying a fully automatic threshing machine Ramesh barely had any funds to buy it. Borrowing a machinery loan in such situations can be of great help.

Machinery Loan Interest Rate

The interest rate on machinery loan is the percentage of interest that has to be paid with EMI each month during the entire repayment tenure. LTF offers the most affordable interest rate for machinery loans starting from just 10.75%. Here are some factors that affect machinery

loan interest rate:
• Business stability: This loan is procured mostly by farmers and therefore while offering you a suitable rate of interest, banks check the stability of your business. If your business has been stable for years, you are more likely to be offered a lower rate of interest.
• Credit rating: Your credit score plays a vital role when banks decide the interest rate for your machinery loan. It goes without saying that a good credit score will give you a low machinery loan interest rate.
• Criminal background: Any sort of criminal background, whether major or minor, will result in the immediate rejection of the machinery loan. Banks always check this criterion so make sure that you stay away from trouble.

Machinery Loan Calculator

A machinery loan calculator is a tool to help you plan your expenses before and after borrowing the machinery loan. Using this calculator, calculate your monthly EMI based on the interest rate and loan tenure. This way you will be sure of the amount that will go out of your pocket each month in the form of repayments. Using a machinery loan calculator is a must as this loan can decide the success or failure of your business. Taking each step with extreme caution is an absolute requirement. With a machinery loan calculator, you are taking the right steps in the right direction.

Are you still running your business with the technology of the 90s? It's time to upgrade! Borrow a machinery loan and keep up with the times by purchasing new and useful machines.

Machinery Loan Eligibility

To apply for a machinery loan you should be between 18 to 65 years old and you should have all the valid documents articulated with the size of land holdings and per acre yield.

Here are advantages and benefits of applying for a Machinery Loan:

There are a whole lot of benefits you can enjoy using a machinery loan. Here are some of those:

• Big amount: At LTF, we understand that machines are expensive and therefore we allow you to borrow a big amount of loan to buy the machinery of your choice.

• Can be used for multiple reasons: A machinery loan, as stated earlier, is not a loan just for buying a new machine. You can use it for several other reasons mentioned above.

• Tax benefits: The interest paid towards a machinery loan is eligible for tax deduction but the principal amount is not. This reduces your taxable income and eventually the tax.

• Unsecured and easy terms: A machinery loan is a collateral-free loan and the terms are pretty easy to understand and follow.

Documents Required For Machinery Loan

• Income proof: according to the submissions made at the time of filing returns
• Bank statements: from the last six months
• ID proof: Aadhar Card or PAN card
• Address proof:passport, electricity bill, rent agreement, etc.
• Other documents: land documents NACH/ECS mandate, PDCs, etc.

Borrowing a machinery loan will be the greatest decision you will make for the growth of your farming business. We must accept the fact that it is now impossible for humans to work without machines. We have come this far because of machines and this undeniable friendship between man and machine will take your farm business to new levels.

Apply for a machinery loan now and become a successful entrepreneur!

This article is authored by L&T Finance

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