5 Best Construction Equipment Loans in India: Fueling Growth through Machinery Financing

In the ever-evolving landscape of business, progress often hinges on obtaining new machinery or upgrading existing equipment. Construction equipment loans provide a financial solution for both MSMEs and larger enterprises. This type of financing also brings along tax advantages for business owners and enterprises. However, it’s important to note that the interest rates, loan amounts, and tenure can vary from one bank or financial institution to another. Equipment financing encompasses a range of options, including finance leases, hire purchase arrangements, and operating leases.

Best Construction Equipment Loans in India

Interest Rates of Construction Equipment Loans (2023)

Here’s a snapshot of the interest rates offered by different banks and NBFCs for construction equipment loans:

  • Bajaj Finserv: 9.75% – 30% p.a. (for all types of equipment)
  • Bank of Baroda: Competitive interest rate (for construction and mining equipment)
  • HDFC Bank: Bank IRR: Min. 7.50% – 14.92% p.a. (for commercial or construction equipment only)
  • ICICI Bank: Interest rate at the sole discretion of the bank (for construction loans)
  • Kotak Mahindra Bank: As per min. prevailing MCLR & max. up to 24% p.a. (for farm and construction equipment)

Please note that the mentioned interest rates, fees, and charges are subject to change and depend on the discretion of the bank, NBFC, and RBI. Additional GST and service tax may apply to the mentioned fees and charges.

Also Read- Explore the Home Construction Loans Available in India !

Eligibility Criteria for Construction Equipment Loans

To be eligible for construction equipment loans, certain criteria set by banks need to be met:

  • Individuals from corporations, partnerships, trusts, proprietorships, public firms, private firms, contractors (from construction sites or mining activities)
  • Minimum age of 21 years when availing the loan, and maximum age of 65 years at the time of loan maturity
  • The company should have been profitable for the last 3 years and stable (geographically) in the business for the past 2 years
  • Income Tax Return (ITR) statements for the last 2 years

Required Documents

When applying for a construction equipment loan, specific documents are needed to verify your details and facilitate the loan process:

  • KYC documents
  • ID proofs: Aadhar card, PAN card, Passport, Voter’s ID
  • Resident address proof
  • Business address proof
  • Business registration proof: Partnership deed or certified copies of MOA / AOA
  • Last 6 months’ bank statement
  • Recent passport-size photos of the applicant or co-applicant
  • Last two years of income tax returns and audited financials
  • Details of suppliers and machinery name

Also Read-How to become a Construction Contractor in India

Benefits of Construction Equipment Financing

Business owners availing construction equipment loans enjoy several advantages:

  • Some lenders offer up to 100% finance for new equipment, with many offering 90% or more
  • Equipment financing from banks and NBFCs is often collateral-free or termed as unsecured loans
  • Most financial institutions provide pre-approval, streamlining the borrowing process
  • Flexible repayment options are available to match customer convenience and budget
  • Competitive interest rates that depend on repayment history and creditworthiness
  • Types of Construction Equipment Loans

Various types of construction equipment loans cater to specific business needs:

  1. Manufacturing Equipment Loan: For those requiring equipment for manufacturing goods.
  2. IT and Office Equipment Loan: Designed for office businesses needing IT equipment and electronics.
  3. Construction Equipment Loan: Supports companies in the construction industry with relevant equipment.
  4. Corporate Aviation Equipment Loan: Meets aviation industry needs for airport and in-flight equipment.
  5. Medical Equipment Loans: Serves the medical industry by funding hospital and clinical equipment.
  6. Electronic and Appliances Loan: Provides financing for electronics and appliances required by businesses.

Types of Equipment and Machinery Covered

Construction equipment loans cover a range of machinery and equipment, including but not limited to:

  • Compactors
  • Fork Lifts
  • Crushing Plants
  • Drills
  • Road Rollers
  • Compressors
  • Dozers
  • Tipper/Dumpers
  • Hot Mix Plants
  • Wheel Loaders
  • Reach Stackers
  • Cranes
  • Backhoe Loaders
  • Excavators
  • RMC Plants
  • Graders
  • Concrete Pumps
  • Transit Mixers
  • Pavers
  • Rock Breakers
  • DG Sets, and more.

Loan tenure options generally range from 5 to 7 years, but they can vary based on the chosen bank and the nature of your business.

Leave a Comment