Tractor Loan Interest Rates in India 2026: SBI, Axis, BOB Comparison

Farm mechanisation is playing an increasingly important role in Indian agriculture, and a tractor is a necessity for improving productivity and managing larger land areas efficiently. Purchasing a tractor requires a significant investment. For many farmers and agri-entrepreneurs, taking a loan becomes a practical option. In such cases, understanding tractor loan interest rates is crucial, as even a small difference in rate can impact total repayment over the years.

With various public sector banks, private banks, and NBFCs competing in the market, the tractor finance interest rate landscape has become more dynamic than ever.

This guide breaks down tractor loan interest rates in India for 2026. It compares major lenders like SBI, Axis Bank, and Bank of Baroda to help you make an informed decision.

By keeping a close eye on tractor loan interest rates, you can plan your repayments more effectively.

What are Tractor Loans?

A tractor loan is a special agricultural loan that enables farmers to buy new or second-hand tractors and other farm machinery. This type of loan is specifically designed to suit the agricultural season. Unlike any general personal loans, these may have a flexible repayment plan which matches the harvesting seasons. When evaluating your options, the tractor finance interest rate should be a key consideration.

There are several small and marginal farmers who might not be in possession of liquid cash to purchase a tractor. But they may have the potential to repay the loan by generating high crop yields. These farmers can greatly benefit from tractor loans. Digital platforms have made tractor loans more accessible in 2026, so that they can be approved faster with minimal paperwork.

How Tractor Loan Interest Rates Work in India

There are various factors that affect the interest rate you are given. There are two common forms of interest structures available with most lenders:

• Fixed Interest Rates: It does not change with the tenure of the loan and offer certainty in monthly payments.
• Floating Interest Rates: It is linked to a given benchmark, such as the Repo Rate of the RBI, and may vary across the loan term.

The tractor loan interest rates are generally higher than home loans but lower than personal loans. This is due to the productive nature of the asset and the risk profile of the agricultural sector. A competitive tractor finance interest rate is often a result of a very strong borrower profile.

Key Factors Affecting Interest Rates

Several variables determine the final tractor finance interest rate offered to a borrower:

• RBI Monetary Policy: Changes in the repo rate by the Reserve Bank of India directly impact the cost of funds for banks, which is then passed on to the borrowers, affecting overall tractor loan interest rates.
• Credit Score (CIBIL): A higher credit score (700+) indicates a reliable repayment history and often qualifies the borrower for the lowest tractor loan interest rate India.
• Loan Amount and Tenure: Larger loan amounts or longer tenures may attract different rate structures depending on the bank's risk assessment, influencing the final tractor finance interest rate.
• Income and Land Holding: Farmers with larger land holdings and stable multi-crop income are viewed as lower-risk borrowers, often receiving better agriculture tractor loan interest rate.

Comparing Major Lenders for 2026

In order to help you make a quick decision, here is a comparison of the leading tractor loan providers in India for 2026. You can analyse how the tractor finance interest rate varies across different institutions:

Disclaimer: The interest rates are subject to change at the bank’s discretion. Refer to the latest, updated rates before making financial decisions.

Detailed Bank-Wise Interest Rate Breakdown

In order to make a fair comparison between tractor loan interest rates offered by various banks, you must also have a clear understanding of the other details of the loan scheme. Here is a detailed bank-wise interest rate breakdown:

SBI Tractor Loan Interest Rate

The State Bank of India offers a tractor loan scheme designed to support farmers in purchasing tractors and related accessories, including insurance and registration charges. It aims to facilitate farm mechanisation and enhance agricultural productivity across India. Their transparent fee structure and lack of hidden charges make them a reliable partner for traditional farmers looking for stable tractor loan interest rates.

Key properties:

• Loan Amount: It provides loans ranging from a minimum of ₹2,00,000 to a maximum of ₹25,00,000. This comes with a margin requirement of 25% of the total tractor cost, which must be paid before or at the time of disbursement.
• Loan Tenure: The loan tenure extends up to 5 years.
• Interest Rate: The SBI tractor loan interest rate in 2026 starts with no collateral at 3.60% per annum.
• Repayment: The repayment is structured in half-yearly instalments through equated principal distributions along with interest.
• Security Requirements: This includes primary hypothecation of the tractor and accessories purchased through bank finance, while collateral security remains optional for loan approval.
• Eligibility Criteria: To be eligible for the SBI Tractor Loan Scheme, you must be:
  • • An individual farmer
    • Have a minimum agricultural land of 2 acres
    • No credit history or CIBIL score over 650, or CIRF Highmark Score over 600

Axis Bank Tractor Loan Interest Rate

Axis Bank offers competitive tractor loan interest rates, which may vary depending on whether you're financing a new or used tractor and the loan tenure you choose. These flexible rates make it easier for farmers to purchase tractors and enhance their agricultural productivity.

Key properties:

• Loan Amount: Axis Bank provides maximum funding up to 90% of the bank-approved price on the particular tractor brand. This can be subject to the underwriting norms of the bank.
• Loan Tenure: The loan tenure extends up to 5 years.
• Interest Rate: The Axis Bank tractor loan interest rate typically ranges from 12.00% - 23.86%, depending on the borrower's profile.
• Repayment: Axis Bank allows a flexible repayment structure. Payments can be made quarterly, monthly, or even half-yearly.
• Security Requirements: The tractor will be hypothecated to the bank, and the bank's charges will be recorded on the registration certificate of the vehicle.
• Eligibility criteria: To be eligible for this scheme, you must be:
  • • Minimum age of 18 years and maximum age of 75 years as on the date of funding
    • Have a minimum agricultural land of 3 acres

Bank of Baroda Tractor Loan Interest Rate

Bank of Baroda offers tractor loans designed to empower farmers and enhance farm productivity through mechanisation. The interest rates are dependent on the loan-to-value (LTV) ratio. LTV is the ratio that represents the percentage of the tractor's total cost that the bank will finance, and the remaining portion will be paid by the borrower as the down payment or margin. With flexible repayment options and competitive tractor loan interest rates, these loans make purchasing tractors more accessible for rural India.

Key properties:

• Loan Amount: The loan amount granted is calculated based on the Loan-to-Value (LTV) ratio of the tractor being purchased.
• Loan Tenure: The loan tenure extends up to five-six years, based on the type of vehicle being purchased.
• Interest Rate: The Bank of Baroda tractor loan interest rate usually sits between 12.25% and 14.50%.
• Repayment: Bank of Baroda allows flexible repayment structures of quarterly, monthly or half-yearly.
• Security Requirements: Hypothecation of the purchased vehicle is mandatory for the Bank of Baroda.
• Eligibility Criteria: To be eligible for this tractor loan scheme, you must be:
  • Minimum age of 18 years and maximum age of 70 years at the time of agreement
  • A local resident of the service area of the branch for at least 3 years.

EMI Examples & Loan Calculator Simulations

To understand how tractor loan interest rates impact your monthly budget, take a look at this simulation for a ₹5,00,000 loan at different rates and tenures:

Even a small difference in the tractor finance interest rate can lead to a significant difference in the total interest paid over the years. This is why comparing tractor loan interest rates is very important.

Tips to Get the Lowest Tractor Loan Interest Rate

Here are a few tips to get the lowest tractor loan interest rate India:

• Maintain a Good Credit Score: Pay your existing bills and KCC (Kisan Credit Card) dues on time to keep your CIBIL (Credit Information Bureau India Limited) score above 700, which directly lowers your tractor finance interest rate.
• Accurate Documentation: Ensure your land records are completely updated and clear in order to qualify for better tractor loan interest rates.
• Test the Waters with More than 1 Lender: Do not accept the first deal. Compare the tractor loan interest rates of at least three different banks.
• Leverage Government Schemes: Check if you qualify for interest subvention schemes or subsidies that can offset a high tractor finance interest rate.

Conclusion

An individual can manage tractor finance well with market understanding and financial discipline. By comparing the tractor loan interest rates offered by banks like SBI, Axis, and Bank of Baroda, you can ensure that your investment leads to prosperity rather than debt. Always aim for a tractor finance interest rate that fits your long-term repayment capacity.

You can learn more about financing options on Mudra. Compare bank and NBFC tractor loan rate offers, understand eligibility criteria, and access transparent information on interest rates and repayment structures, all in a single platform.

Also Read:
- Tractor Loan in India: Interest Rates, Eligibility, EMI & How to Apply (2026)
- What is a Business Term Loan?