Types of Loan for Agricultural Land Purchase

Published on: 29 May 2023

A loan for purchasing agricultural land can help you buy land to cultivate crops or do other agricultural activities. This secured loan is one of many types of land loans, some of which are:

• Lot loans: These loans are for developed land that has some infrastructure or utilities, such as roads, water, or sewer lines

• Agricultural land loans: These loans are specifically designed for farmers or horticulturists who need to get a loan for agriculture land purchase

• Commercial land loans: These loans are for investors or businesses looking to purchase land for commercial development, such as building a shopping center or office complex

There are multiple financiers in the market that can help you fund your land purchase for agriculture. Make sure you do your research and choose the right type of land loan for your needs. Read on to know more about loans for agricultural land purchase.

Eligibility criteria for a loan for agriculture land

The eligibility criteria for a loan for agricultural land purchase differs based on the lender you choose. Here are some common requirements:

Age: You must be at least 18 years old to be eligible for a loan

Type of land: The land should be agricultural land and should not be used for any other commercial or residential purpose

Income: You should have a regular source of income, either from farming or any other business or profession

Credit score: A good credit score is usually required to get approved for a loan, although some lenders may be willing to work with borrowers with lower credit scores

Documentation: You’ll need to provide proper documentation such as land records, proof of ownership, income tax returns, and bank statements

Characteristics of an agricultural land loan

Here are some common features of an agricultural land purchase loan.

• Loan amount: Agricultural land loans can range from a few lakhs to several crores.
• Interest rate: Interest rates on agricultural land loans can be fixed or floating and vary depending on the lender, loan amount, and tenure.
• Loan tenure: The tenure for agricultural land loans can range from a few years to several decades, depending on the borrower’s repayment capacity and the lender’s policies.
• Collateral: Agricultural land is usually considered as collateral for the loan, and the lender may also require additional collateral such as crops, livestock, or farm equipment.
• Repayment options: Agricultural land loans can be repaid in flexible monthly or annual installments, depending on the lender’s policies.

How to apply for a loan to buy agricultural land 

Applying for this type of loan is very similar to that of a home loan. You can visit the lender’s physical branch, talk to a representative and submit the required documents. You can also visit the lender’s website, go to the loan on agricultural land purchase section, fill in the required details, and submit the necessary documents. Post approval you will get the requested loan amount credited to your bank account.

Armed with this information, you can now plan your loan for buying agricultural land with ease. Remember, public sector banks often have agricultural land purchase schemes for small or marginal farmers that come with affordable terms. However, check the eligibility criteria carefully as these may be stringent.

FAQs on Loan for Agricultural Land Purchase

Can I get a personal loan to buy agricultural land?

An agricultural land purchase loan is usually a secured loan backed by the land as collateral. A personal loan is usually unsecured.

What is the interest rate on a loan to buy agricultural land?

The interest rate on a loan for agricultural land can vary depending on the lender, loan amount, and repayment tenure. In some cases, they may be based on the MCLR and base rate with an additional interest of 2-3% as per the lender.

What documents are required for a loan to buy agricultural land?

The documents required for a loan to purchase agricultural land may include a copy of the land records, proof of ownership, a copy of the sale agreement, income tax returns, bank statements, and any other relevant documents requested by the lender.

Can farmers get a personal loan?

Yes, farmers can get personal loans if they meet the lender’s eligibility criteria and have proper income documentation.