What Are Farm Equipment Loans? A Complete Guide

A farm equipment vehicle, tractor cultivating field

India is an agricultural country and the farming industry is one of the major sectors that require constant cash flow to keep things running. Be it for the land, the seeds, the storage facilities, or even the farming equipment required in the field. But what options does a farmer or a farm owner have at their disposal in such situations? Farm equipment loans, as the name suggests, are loans specifically designed for farmers to help them with the machinery of their farms. It could be an attachment to a tractor, a seed-sowing machine, or a sprinkler. 

Banks sometimes tend to take longer than usual to process a loan, which is why the farm equipment loans offered by other lending institutions like NBFCs have a high demand. The smooth streamlined process, from application to disbursement of money, gives an added advantage to such institutions to be the first choice.

Need for Farm Equipment Loan 

Prepare for Every Situation

The volatile nature of this industry makes it even more important to have cash ready for any and every situation. Such loans are perfect for farmers as it might solve their current problem and also keep them prepared before the next problem arises. The best part about these loans is that you can get the money when you need it to buy machinery and repay later as per the terms and conditions.

Levelling with Big Corporations

The biggest competitors of farmers are the multinational corporate agencies that try to cut out farmers’ share from the market. Farmers struggle to compete with them due to limited resources and technology. Utilising such loans to constantly upgrade and update their equipment helps in trying to level the playing field for them as well. New technologies like GPS-guided tractors and automated irrigation systems help farmers get a better quality from the desired crop at a cheaper rate and better efficiency. Along with this, the other machinery that has been in use for a long time also requires due maintenance from time to time and that could be expensive in many cases. These loans help farmers give a much-needed boost to their vehicles and morale.

How to Look for Lenders in the Market?

With so many options available in the market, one needs to choose which plan and lender suits their requirements the best. A few of the indicators that need to be considered before choosing a loan lender are as follows:

  1. Check the lender/lending institution’s background: As important as it is for the lender to check an applicant’s background, it is also important for the applicant to check the lender’s background. Lenders often earn a reputation over time. One needs to know about it beforehand.
  2. Online reviews/comments: Checking the online presence of a brand/company is important as it helps get an idea about the public perception of the brand. Many genuine reviews posted on authentic platforms give a clear picture of the brand.  
  3. Get relevant information from lenders: One should clarify all queries and understand the terms and conditions associated with loans before deciding on a particular lender.

By following these few steps, one can ensure that the lender they choose will be able to help them in the best way possible.

How to Apply for Farm Equipment Loans?

Before applying for a loan one needs to assess their requirements and then make a decision. A clear understanding of what is needed helps figure out the best possible loan options that are available. There are many options in the market with each having its unique criteria. Once a particular loan is finalised, the next step is to start gathering mandatory documents like ID proof, address proof, ownership documents, and income proof. In some cases, one must also declare if they have any existing loans. 

Digitalisation has made it easy for everyone to apply for a loan irrespective of their location or background. One can apply for a farm equipment loan sitting at their house, online by just clicking a few buttons. Fill out the application, and provide all necessary details and documents. Along with these, a good credit history is also needed to make the process easy and stress-free. Assessment of the application will be based on the documents that are provided. Once verification and the processing of the documents is done, the applicant will be informed about it and the details of terms and conditions will be given to them (this will only happen if the application is approved and the time may vary depending on the requirements).

The final step is when the application gets approved and it’s time to disburse the amount. Read all terms and conditions carefully. One must adhere to these conditions as it’ll help have a good credit score and also save from paying penalties.


If one fails to follow the terms and conditions set before the deal is done, the lending institution has all the right to take away the equipment bought with the loan money. Basically, as collateral, the lending institution keeps the equipment bought.

Summing Up

There is no escaping the fact that at the end of the day, these are machines. From time to time, they do require necessary changes to keep their engines running. Such farm equipment loans are helpful in times of need and it is the responsibility of the lending institutions to make the borrowers aware of the schemes and options they have.


What Is A Farm Equipment Loan?

Farm equipment loans are an important financial tool for farmers and farm owners. It comes in handy whenever you need to buy a tractor or its accessories, irrigation system, or fertilizer spreader.

What Is The Minimum Cibil Score For Tractor Loan?

Ideally, anything above 650 should be good enough for you. But there have been instances where lower credit score-carrying individuals have also been granted loans. It’ll mostly depend on your lender. 

What Type Of Loan Is An Equipment Loan?

An equipment loan is usually given to help businesses and individuals procure the necessary equipment to run their businesses.

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