When choosing agriculture equipment like chaff cutters farmers think about whether they choose the Equivalent Monthly Installment (EMI) or Full Payment.
In this article, we will explain the differences between buying a chaff cutter on EMI vs Full Payment.
EMI stands for Equated Monthly installment, This scheme will enable to spread of the overall cost of the machine the multiple months for easy payment
In instalments, interest will be charged and the EMI included with the Principal and Interest.
There will be pre-closure charges if the farmer wants to repay the whole amount before the end of the EMI tenure.
The charges will be on the Principal Amount and Which charges also include the applicable taxes like GST.
What to Check, Before Buying Kutti Machine on EMI
- Interest Rates: Farmers must check the interest rate, compare the multiple lenders and choose the best who are offering the best interest rates, even a 1% change in EMI can affect the whole amount of the repayment.
- Calculation: Calculate the whole amount of payment that you are paying including principal, interest, and all the charges.
- Tenure: Choose the tenure depending upon the monthly income which must be affordable. when it is farming there will not be equal income every month so plan accordingly
Buying Chaff Cutter on EMI
We will discuss the advantages and disadvantages of the 0EMI option clearly
Advantages of Choosing Chaff Cutter on EMI
The EMI facility makes the farmers spread the cost of the chaff cutter into monthly installments which is easy to manage.
When it comes to the EMI farmers can plan their monthly budget of expenses and allocate as per the requirement for each.
When starting a dairy farm, goat & sheep farm, or Rabbit farm there will be a minimum investment required farmers can buy the chaff cutter with an initial investment with less amount on a chaff cutter.
The farmers can afford the machine with the EMI option in the place of full payment option and repay in monthly instalments as per the budget.
Whether it is dairy farm farmers get regular income every 15 to 30 days, with this EMI option farmers can easily repay the amount without any stress.
Farmer can save and keep the amount in his bank which facilitates auto debit when the EMI date arrives without going to the bank.
Help to Spend on Cattle
Instead of spending the full amount on chaff cutter, the farmers can choose EMI and spend the amount on buying cattle as well as feed.
This will increase the capacity and performance of the farm, with the addition of a chaff cutter he can manage the expense of EMI with income coming from the cattle which he buys in the place of the chaff cutter.
Best Interest Rates
Farmers take loans from pan brokers and street lenders, they charge high amount of interest rates. The interest rate will be compounded year and year.
farmers suffer to repay so they don’t have interest in taking these types of loans to buy chaff cutters in this place if the bank provided the EMI option which helps to reduce the loan amount every month.
There will be no compounding on interest, the amount is the same for every month so farmers can plan the repayment easily.
Farmers can immediately acquire the machine without waiting, and the delay of waiting for saving and acquiring funds will be reduced.
With EMI the farmers get the machine to start enhancing the farming operation with immediate effect. The farmers utilize and start earning from the machine without further waiting
Disadvantages of choosing Kutti Machine on EMI.
The rate of interest is high and they may not have proof to prove their income like bank statements. the income received from cattle received from dairy which is mostly in cash.
It is difficult to prove the potential earning of the income so the financial institution like NBFCs come front to provide loans with high interest and high processing charges.
No Regular Income
Farmers may not have regular are constant income, for example, if we take dairy cattle can give milk for 9 months, and on average in the other 3 months it might be difficult to repay.
The income from crops will come once a year or once for 6 months.
The farmers must plan the alternate income when there is no income from the milk.
All the sellers may not offer the EMI options, with limited buyers and limited options farmers will have to choose from specific buyers and only the specific machines which they are offering.
With this, the farmer may not have the option to choose what he likes and may not have the option to negotiate.
Buying Chaff Cutter on Full Payment
Choosing full payment has some advantages as well as disadvantages, Depending upon the situation on the availability of funds the farmer considers the payment options.
Advantages of Full Payment
We will discuss some of the advantages of buying a chaff cutter on full payment.
Paying the full amount on the chaff cutter helps the farmer with immediate ownership there will be no liabilities and monthly payments to worry about.
With EMIs every month must maintain the money, and when we see the chaff cutter we might not feel well and worry about its liability.
Savings on Interest and Processing Charges
The interest can be avoided by choosing the full payment option, there will be no processing charges with the highest interest rates the farmers may feel bad, and if any repairs come in a month it’s difficult to bear EMI and repair charges at once.
When paying the full payment will always have the power to negotiate and with many suppliers, we can choose the best chaff cutter from the best supplier by negotiating which causes us to get the machine at a lower price.
Disadvantages of Full Payment
We also have some disadvantages of buying the kutti machine with a full payment option those are
Initial Investment Problem
Paying the full amount only on the machine causes financial strain, instead of full payment, the farmer can spend the money on operational expenses and buying cattle.
Farmers may not have the full amount at once it is difficult for them to save the money at a time to buy the machine.
Agriculture equipment including chaff cutter depreciates over time, so paying the full amount upfront will cause the risk of declining in the machine’s value over time