Everything You Should Know About Tractor Refinance

Table of Contents

• Introduction
• What is Tractor Refinance?
• Factors Affecting the Tractor Refinance Scheme
  • Existing Loan Amount
  • CIBIL Score
  • Tractor RC Availability
  • Tractor Free of Hypothecation
  • Tenure of Existing Loan
  • EMI for your Current Loan
  • Number of EMIs Paid
• How to Apply for a Tractor Refinance Loan?
  • Eligibility Check
  • Selecting Lenders
  • Submitting Documents
  • Disbursal of Loan Amount
• Conclusion

Introduction

Farmers in India are not educated much because of the limited number of schools in village areas. So, they are not aware of the things going on in the world. Whether it is regarding tractor insurance or tractor refinance, they are unaware of the benefits they avail of from the banks and insurance companies. This blog will help you understand the loan against tractor or tractor refinance and its benefits.

What is Tractor Refinance?

A tractor refinance is a loan against your tractor, allowing you to take a new loan to pay off your existing loan while keeping the same number of payments and the same interest rate.

This scheme is an excellent option for farmers for an extra source of income. A loan against a tractor is helpful for them as it keeps the farmers' income stable and on time and reduces stress. The farmers will also get more interest on this loan amount from the bank. It ensures you do not have to deal with additional expenses after taking the tractor refinance scheme.

Factors Affecting the Tractor Refinance Scheme

If you are planning to take a loan against a tractor, then you should know a few things discussed here. Having an idea of a tractor refinance scheme will help you to make your decision on whether you want to take up this scheme or not.

There are a host of factors that affect your chances of getting a loan against tractor. These include your existing loan amount, CIBIL score, proof of landholding, and availability of the RC of tractor, among others. Let us see each factor in brief.

Existing Loan Amount

The existing loan amount on your tractor will ensure whether you are eligible to avail yourself of a loan against your tractor or not. You can get up to 90% of your tractor's current market value or up to 10 lakhs. The amount also depends on your tractor model and the purchase year.

A loan against your tractor has a direct relationship with your existing loan. It means the higher existing loan amount will get you a higher tractor refinance loan amount. For example, if you have a current loan amount of 7 lakhs, then the tractor loan amount will be around 8 lakhs to 9 lakhs, depending on the period and the number of EMIs paid on the existing loan.

CIBIL Score

Your CIBIL score shows your repayment history. If you have a good CIBIL score of 650+, it means your track record in repaying existing loan is very good. Anything below 650 is considered below average. So, the higher the CIBIL score, the higher the chance of getting a loan against tractor. Thus, you must maintain a good CIBIL score.

Tractor RC Availability

The availability of the registration certificate (RC) of your tractor increases the chance of getting your tractor refinanced. A registration indicates that tractor is genuine. Hence, always ensure that you keep your RC of the tractor handy when applying for a loan against tractor.

Tractor Free of Hypothecation

While applying for a loan against tractors, you must ensure that your tractor is free of any hypothecation. This is very important. Because if your tractor remains pledged as collateral while applying for a tractor refinance, then the chance of getting the loan diminishes.

 Tenure of Existing Loan

If you have opted for a longer tenure in your existing loan, it means you have to pay high-interest charges on your loan over the tenure. However, it ensures that you will get a higher loan amount when you apply for a loan against your tractor.

EMI for your Current Loan

Taking a loan against a tractor means clearing the existing loan using a new tractor loan with lower EMIs and an attractive rate of interest. Additionally, your current loan EMI will authorise you to see the amount you need for the foreclosure of your existing loan and how much you will get as cash for the expenditure.

Number of EMIs Paid

The number of EMIs you have paid on your current loan will help you find out your eligibility for a refinancing loan. It shows how much amount is left to be paid in your existing loan. The eligibility criteria are that at least 12 EMIs are paid in your existing loan amount.

The reason is simple. It will influence the refinancing loan amount and how it will be divided between the cash you receive and the amount allocated for closing your current tractor loan.

How to Apply for a Tractor Refinance Loan?

You must follow the procedure below to apply for a tractor refinance loan. The process includes:

Eligibility Check

If you are a farmer seeking a refinancing loan, you must fulfil specific eligibility criteria to obtain it. Firstly, you need to be the owner of a tractor and provide proof of ownership, including the tractor's RC. Additionally, you should have an existing loan with at least 12 EMIs paid.

Selecting Lenders

In India, you have several leading financiers to choose from, including banks and NBFCs. They offer loans at interest rates ranging from 17.50% to 23.50%. If you are already a customer of any of these lenders, you may receive preferential treatment, making the process smoother.

Submitting Documents

The documentation required for the refinancing loan is minimal. You will need the RC of your tractor as proof of ownership, bank account statements, the last six months' bank statements of your existing loan showing timely EMI payments, KYC documents, and a copy of your PAN card.

Disbursal of Loan Amount

Once you have submitted all the necessary documents on time, you can expect the loan amount to be credited to your bank account within 48 hours. In the event of a delay caused by your current loan lender's failure to provide the NOC (No Objection Certificate), 90% of the tractor refinance loan amount will still be dispersed to your account. The remaining 10% amount will be credited as soon as the NOC is obtained from your current lender.

Conclusion

So, it was all about the concept of 'tractor refinance' and its importance in a farmer's life. Before proceeding with the loan application, ensure you meet the eligibility criteria. Once confirmed, you can apply for a refinancing loan from any available financiers. We believe this information on refinancing loans will be valuable to you, especially in a 'bad loan' situation. For more information, you can contact Tractorkarvan anytime.