Tractor Loan in India: Interest Rates, Eligibility, EMI & How to Apply (2026)

In India, tractor prices range between Rs. 5 lakhs and Rs. 15 lakhs based on horsepower and brand. Farmers and farm families may not have that kind of money ready for a single purchase. That’s why they often look for a loan option to buy a tractor for their agricultural needs. This guide walks through everything about tractor loan financing. It covers current interest rates, who gets approved, how much funding is available, what documents are required, and where to apply for tractor loan approval.

What is a Tractor Loan?

A tractor loan helps farmers purchase tractors when they can't pay the full price upfront. Banks, NBFCs, and cooperative societies lend money specifically for this purpose.

The lender pays 75-90% of the tractor's price directly to the dealer. The farmer arranges the remaining 10-25% as a down payment. Monthly instalments then repay the borrowed amount plus interest over 3-7 years. The range can vary based on the loan provider.

These loans count as priority sector lending for banks. This status often attracts lower interest rates than regular consumer loans. The tractor itself usually serves as security. Some lenders may ask for land papers or guarantors as additional collateral.

Both new tractors from showrooms and used tractors from individual sellers qualify for financing. The process, rates, and requirements differ between new and used purchases.

Tractor Loan Interest Rates in India (2026)

Tractor loan interest rates depend on which lender you choose and your credit profile.

Rates Based on the Type of Loan Provider

Tractor Loan Interest Rates Based on Different Banks

What Changes Your Rate

Multiple factors help determine the rates quoted to you:

Credit Score

Your credit score matters most. Scores above 750 get the lowest rates banks offer. Scores between 650 and 750 face moderate pricing. Below 650 usually means rejection from banks, though some NBFCs might still lend at premium rates.

Land Ownership

Owning agricultural land helps. Lenders see land ownership as lower risk and offer better terms. Having existing accounts or previous loans with the same lender sometimes brings rate discounts.

Loan Size and Tenure

Loan size and tenure affect pricing, too. Bigger loans occasionally get lower rates. Longer tenures might cost slightly more because the lender's money is tied up longer.

Tractor Loan Eligibility

Banks check several things before approving tractor loan eligibility.

Basic Requirements

Age needs to be between 21 and 65 years at the time of application. Some banks allow up to 70 years at loan maturity.

The applicant must be a farmer or involved in agricultural activities. Agri-contractors and people in allied farming businesses sometimes qualify, too.

Owning farmland isn't always mandatory, but it strengthens applications significantly. Most lenders prefer at least 1-2 acres, though this varies.

Income proof matters. Farmers need to show steady earnings from agriculture or related activities. Many lenders accept income from dairy, poultry, or other farming-related businesses.

Credit History Needs

A clean repayment record on any existing loans helps improve approval chances. First-time borrowers without a credit history can still get loans, but face stricter checks.

CIBIL scores get checked during evaluation. Above 750 brings smooth sailing. Between 650 and 750 needs extra documentation. Below 650 typically gets rejected by banks.

Loan Amount, Down Payment & Tenure

Understanding how much you can borrow and what you'll pay helps plan purchases better.

How Much Gets Financed

Lenders fund 75-90% of the tractor's price. Farmers arrange the remaining 10-25% themselves. For an Rs. 8 lakh tractor, expect to pay Rs. 80,000 to Rs. 2 lakhs upfront.

Public banks typically finance 85% for new tractors. Private banks vary between 80-85%. NBFCs sometimes go up to 90% for borrowers with strong credit.

Used tractors get less financing. Banks lend 60-75% of the current market value, not the original price. Tractor age matters heavily. Models under 5 years old get better terms than older ones.

Repayment Period Options

Tractor loan terms generally run from 3 to 7 years. Some lenders allow up to 9 years for amounts above Rs. 10 lakhs.

Shorter periods mean bigger monthly payments but less total interest paid. A 3-year loan costs much less in interest than a 7-year loan, but the EMI doubles.

Longer periods reduce the monthly burden, which helps farmers with seasonal income. The trade-off is paying substantially more interest over time.

Many lenders offer flexible schedules matching farming cycles. Pay more during harvest, less during lean months. Some allow big payments after major crop sales.

Maximum Borrowing Limits

Public banks lend up to Rs. 25 lakhs for tractors. Private banks usually cap at Rs. 15-20 lakhs. NBFCs sometimes go higher for commercial operations.

The actual approved amount depends on tractor price, your income, existing debts, collateral value, and credit score.

Banks calculate how much EMI you can afford. They allow EMI up to 40-50% of the monthly income. This capacity determines the maximum loan for your chosen tenure and rate.

EMI Calculation Example

Knowing monthly payments helps budget properly. A tractor loan EMI calculator makes this easy. Comparing loan options with varying tenure and rates can help make an informed decision.

A Sample Scenario

Take a Mahindra 575 DI priced at Rs. 7,50,000. Bank finances 85% at 10.75% interest.

Loan amount: Rs. 6,37,500 Down payment: Rs. 1,12,500 Chosen tenure: 6 years Monthly EMI: Rs. 12,095 Total interest: Rs. 2,32,340 Total paid: Rs. 8,69,840

The farmer pays Rs. 12,095 every month for 72 months. Interest adds Rs. 2,32,340 to the borrowed Rs. 6,37,500.

Picking a 4-year term instead would raise EMI to Rs. 16,270 but cut total interest to Rs. 1,42,960. That saves Rs. 89,380 in interest costs.

New Tractor Loan vs Used Tractor Loan

Financing differs significantly between brand-new and second-hand tractors.

Buying New

Interest rates for a new tractor loan run 0.5-1% lower than used tractor rates. Banks finance 85-90%, so down payments stay smaller.

Paperwork is simpler. Dealer invoice plus standard KYC documents usually suffice. Banks have pre-arrangements with major manufacturers, speeding approvals.

New tractors include warranties and service packages. Maintenance costs stay low initially. Resale value remains higher if sold later.

Approvals come faster. Many dealers have bank representatives on-site offering instant approvals.

Buying Used

Used tractor loans help farmers on tighter budgets. Purchase prices are much lower than those of new models.

Rates run 1-2% higher than new tractor financing. Tractor finance interest rate for used models ranges from 11% to 15% across lenders.

Banks only finance 60-75% for used tractors. Higher down payments are required. A Rs. 3 lakh used tractor might get only Rs. 2 lakh financing, needing Rs. 1 lakh upfront.

Documentation gets complicated. Banks want original RC, NOC from previous lender if any, and valuation reports from authorised mechanics.

Age limits apply. Most banks only finance tractors under 7-8 years old. Older models get rejected.

Mechanical condition matters. Banks often insist on inspection before approval. Poor condition means rejection or reduced loan amounts.

Quick Comparison: New Tractor vs Used Tractor

Documents Required for Tractor Loan

Having tractor loan documents ready speeds up applications.

Identity and Address Papers

Submit any government photo ID. Aadhaar, Voter ID, Passport, Driving Licence, and PAN card work.

Address proof can be the same document if it shows the current address. Otherwise, recent utility bills, property tax receipts, or bank statements work.

Income Verification

Farmers prove agricultural income through land documents. Sale deeds, 7/12 extracts, or patta papers show farming activity.

ITR for the past 2 years helps those with documented income. Many farmers don't file returns because agricultural income is tax-exempt, so banks accept alternatives.

Crop insurance papers, Kisan Credit Card statements, and cooperative society loan records demonstrate active farming.

For supplementary income from dairy, poultry, or other activities, submit relevant business proofs.

Tractor Papers

New purchases need the proforma invoice from the dealer showing model, price, and specifications.

Used tractors require RC in the seller's name, pollution certificate, insurance papers, and NOC from previous financiers if applicable.

Other Papers

• Passport-size photos of the applicant and co-applicant, if any.
• Six months of bank statements from the primary account.
• Post-dated cheques or ECS mandate for EMI deductions.
• Property documents are offering additional collateral.
• Co-applicant or guarantor papers, including their ID, address proof, and income proof if the lender requires one.

How to Apply for a Tractor Loan

The tractor loan apply online process has simplified applications considerably.

Online Route

• Go to the lender's website and find the agricultural loans section. Most banks have separate portals for tractor finance.
• Fill out the application with personal details, contact information, loan needs, and tractor specifications.
• Upload scanned documents. Make sure files are clear and within size limits. PDF format works best.
• Submit and save the reference number. Use this to track progress.
• Lenders review applications within 2-3 working days. They might call for clarifications or extra documents.
• After initial approval, they schedule a meeting for physical document checks and biometrics. Some send field officers to your location.
• Final approval brings a sanction letter via email and post. This specifies the approved amount, rate, tenure, and conditions.
• Take the sanction letter to the tractor dealer. The dealer submits the invoice to the bank. The bank pays the dealer directly.

Branch Visit Route

• Go to the nearest branch of your chosen bank or NBFC. Ask for the agricultural loan officer.
• Collect the application form and brochure. Fill it carefully.
• Submit the form with all documents. The officer checks them immediately and gives a receipt.
• Field verification happens within a week. Their representative visits your farm and home to confirm details.
• After satisfactory checks, the loan committee reviews your application. Decisions come in 7-15 days.
• Post-approval, sign the loan agreement and related papers at the branch. Pay processing fees.
• Disbursal happens through direct dealer payment or account credit, depending on bank policy.

Dealer Financing

• Major tractor brands tie up with multiple lenders. Going to authorised dealers often gives the fastest approvals.
• Select your tractor model at the showroom. Tell them you need financing. The dealer's finance desk has bank and NBFC representatives.
• These reps provide application forms and help fill them. They collect documents and forward them immediately.
• Approvals through dealers often come within 24-48 hours for eligible applicants. The dealer handles everything with the lender.
• This works best for a new tractor loan as the dealer guarantees authenticity and submits invoices directly.

Best Banks Offering Tractor Loans in India

Several lenders provide competitive tractor loan options.

State Bank of India

• SBI offers agricultural equipment financing from 9.50% annually. They fund up to 85% of the new tractor cost.
• Maximum lending reaches Rs. 20 lakhs with repayment up to 7 years. SBI has branches everywhere, making access easy for rural farmers.
• Flexible repayment matches farming income patterns. EMIs can vary based on harvest cycles.
• Digital platforms enable online tracking and account management. Insurance bundles come with tractor finance for added protection.

Axis Bank

• Axis Bank provides tractor financing from 10.25% yearly. They finance both new and used tractors with up to 85% LTV for new models.
• Loans range from Rs. 50,000 to Rs. 15 lakhs with 3-7 year terms. Approvals come within 48-72 hours for eligible cases.
• Existing customers with good conduct get pre-approved offers needing minimal paperwork.

Bank of Baroda

• BOB finances agricultural equipment from 9.75% annually. The scheme covers tractors, tillers, harvesters, and other farm machinery.
• Lending goes up to Rs. 25 lakhs with flexible repayment up to 9 years. They finance 85-90%, depending on your profile.
• Strong rural presence with branches in farming regions makes them accessible. Their agriculture focus makes them particularly farmer-friendly.
• Special schemes for small farmers provide subsidised rates. Government subsidy programmes integrate with regular tractor loan products.

NBFCs

• Non-banking lenders specialise in tractor financing with faster processing but higher rates.
• Mahindra Finance offers dedicated loans from 11.50% onwards. Approvals are complete within 24 hours. They finance up to 90% with relaxed documentation.
• Cholamandalam provides equipment finance from 12% onwards. Tie-ups with all major brands and doorstep service in rural areas.
• Tata Capital extends loans from Rs. 1 lakh to Rs. 15 lakhs at 11.75% onwards. Quick disbursal within 2-3 days.
• L&T Finance specialises in rural financing with rates from 12.25%. Customised repayment schedules match agricultural cash flows.
• NBFCs accept lower credit scores and limited documentation compared to banks. The trade-off is higher rates and fees.

Why Choose My Mudra for Tractor Loan

Getting a tractor loan involves comparing rates across banks, understanding eligibility, gathering documents, and following up on applications. My Mudra removes this hassle through a single platform.

• Instead of visiting multiple lenders separately, apply once on My Mudra and receive offers from several banks and NBFCs together. Compare all options side by side with rates, fees, and terms visible clearly.
• Expert support is available throughout the journey. My Mudra helps with documentation guidance, eligibility assessment, and suggests suitable lenders. They handle bank communication and help speed up processing.
• The platform provides tractor loan EMI calculator tools for financial planning. Simulate different scenarios, compare EMI burdens across tenures, and understand total interest before deciding.

Beyond tractor finance, My Mudra offers business loans, including machinery loans for farming operations, working capital for agricultural needs, and personal loans for emergencies. This covers farmers' various financial requirements through one trusted platform.

Also Read:
- Top Agriculture Business Loans for Farmers
- How to Get a Machinery Loan for Your Business?