Commercial Loan for Machinery: Learn About Interest Rate, Eligibility and Repayments

Nov 18, 2020

Commercial Loan for Machinery: Learn About Interest Rate, Eligibility and Repayments

With technological breakthroughs bringing advanced machinery to disposal, purchasing state-of-the-art equipment and tools has become an integral part of maintaining a competitive edge and fostering business growth. Purchasing new and refurbished machinery also aid businesses to cut back on repair and maintenance costs, and boosts the overall productivity of their manufacturing units.

Now, while availing new machinery for business or upgrading the existing ones might help to control cost, in the long run, purchasing them will require substantial capital investment on the owner’s part.

To ensure that businesses can purchase new machinery without putting a dent on their financial standing, several financial institutions have introduced various types of machinery loan in India.

What are these loans? Which one should you choose to maximise your benefits?

Read on to know more!

Types of Commercial Loan for Machinery Available in India –

Any loan extended by financial institutions that can be utilised to finance the purchase of machinery by businesses can be categorised as a machinery loan in India.

Following are a few such types of loan options that one can opt for to purchase new machinery or upgrade their existing ones –

  • Business loan for machinery

These are unsecured advances that are specifically provided to finance the purchase of machinery. Business owners can apply for these loans, which are offered between price ranges of a few lakhs up to crores, to purchase any kind of machinery, both big and small, for their businesses.

However, to avail these advances, business owners mostly have to satisfy a few commercial loan for machinery eligibility criteria. For instance, some lenders offer these loans only to businesses with a vintage of three years or more. It can thus be difficult to avail these loans for those looking to purchase machinery to set up a new business.

  • Government machinery loans for MSMEs

The Small Industries Development Bank of India (SIDBI) operating under Government of India’s Department of Financial Services offers the specialised loan scheme “SPEED” to MSMEs for purchasing different types of machinery.

Nonetheless, to qualify for this business loan for machinery, a venture has to be registered under the MSME Act. This limits the scope for many businesses operating otherwise to avail this loan.

  • Gold loans

These are secured loan options that offer borrowers several benefits when it comes to funding the purchase of machinery for businesses. With a gold loan available for utilisation as a commercial loan for machinery, business owners can maximise the utility of their assets, and avail the advance without having to satisfy any stringent eligibility criteria or complicated documentation processes.

Following are a few merits that gold loans present over other loan options when it comes to funding the purchase of machinery for business.

Gold Loans – Advantages They Present over Other Loan Options

Starting a new business and need a loan for purchasing machinery?

Well, if you want to avail a machinery loan while still in the process of setting up your business, chances are you might not qualify for one. It is because most lenders look at the business vintage before deeming one eligible for it. Gold loans are, however, offered to individuals based on the value of the gold they pledge. It is thus accessible for all.

Furthermore, gold loans do not have any end-use restriction and can be utilised to fund other requirements as well. As a result, they can not only be used to purchase machinery, but also fulfil other funding needs for your business if required.

Also, since these are secured loans, you can avail a lower interest rate for them, as compared to collateral-free loan options.

Apart from the above-mentioned benefits, you can also enjoy several other advantages if you avail a gold loan from Rupeek Fintech Pvt. Ltd.

Benefits of Availing a Gold Loan for Machinery Purchase

When it comes to machinery loan in India, gold loans qualify by virtue of their unrestricted end-use feature. They also make for the most convenient option for several reasons, as mentioned previously. These benefits are amplified with Rupeek’s unique lending features due to the following factors –

  1. Hassle-free, doorstep loan facility

Yes, that’s right!

It is a first-in-market feature on gold loans, offered by the lender, making it convenient to avail funds. You will simply need to make an online application through the company’s app or website. Next, a loan manager will then be appointed to visit your house for the valuation of your gold, alongside KYC registration. After completion of these formalities, your loan will be approved.

  1. Loan disbursal in under 30 minutes

Once approved, it is disbursed to your account within 30 minutes, allowing you to avail cash instantly. Furthermore, the loan manager waits at your house until you receive the loan amount in your account, and then proceeds to leave with your gold safely stored in a GPS-traceable bag.

  1. Optimum security for pledged asset

You might wonder what will happen to your gold during the loan tenure.

Well, it is safely stored in the nearest partner bank’s safety vault situated within 3 km from your house, until you can re-possess it after complete loan repayment. The pledged gold is also insured during this term, further eliminating the risk of any financial loss.

  1. A high loan to value

Loan to Value or LTV is the maximum percentage of an asset’s total value that a lender is ready to provide as a loan.  With this gold loan from Rupeek, you can avail the highest LTV against your gold and subsequently fund the purchase of your machinery with ease.

To understand LTV better, take a look at an example.

Suppose, you are pledging gold worth Rs. 10 Lakh as collateral, and you can avail an LTV of 70% against it. Your loan amount will, thus, stand at Rs. 7 Lakh.

  1. Ease of repayment

Finally, the gold commercial loan for machinery repayment process is also extremely convenient. These loans are available for a tenure ranging between 3 and 6 months, with a further extension of up to 6 months possible. During this time, you will only have to pay the monthly interest amount towards the total repayment liability. The principal portion of your machinery loan has to be repaid at the end of the tenure through bullet payment. Or, you can also choose to defer the entire repayment liability until the tenure’s end and make payment at a go.Thus, with the gold commercial loan for machinery online application facility, minimal documentation and hassle-free disbursal and repayment options; such advances make for the best options to see you through machinery-purchase requirements with ease. You can estimate the actual loan amount you can avail against your gold before you apply through the gold loan calculator available online.

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