Owning a tractor is essential for many farmers to boost productivity, but the expenses involved extend far beyond its purchase price. One of the major factors impacting the overall cost of owning a tractor is the financial commitment tied to a tractor loan. Understanding these loan-related costs can help farmers make smarter financial choices.

When farmers buy a tractor, they often rely on a tractor loan due to the high upfront cost. While loans make buying a tractor more manageable, they also add extra expenses. Apart from repaying the borrowed amount, farmers need to consider interest charges, processing fees, and other hidden costs that come with a loan.

Firstly, interest rates significantly affect how much farmers pay over time. Even a small difference in interest can greatly increase the cost of ownership. For example, if a farmer takes a ₹5 lakh tractor loan at an annual interest rate of 10% for five years, the total interest payment alone would amount to around ₹1.37 lakh.