Unlike that used work truck you may have paid for with cash, pre-owned farming equipment requires hefty sum to purchase. So you’ll probably find it necessary to obtain financing in order to afford a quality used combine, tractor or other piece of machinery essential to the success of your farm.
Below you’ll find several different financing methods and terms, most of which are made available to purchasers of new or used equipment. Different outlets will offer different financing options, so be sure to contact the bank or finance company you’re interesting in working with to find out if they offer the loan that’s right for you.
Equipment Finance Agreements
EFAs give you more say as to when your first payment will be due and allow you to make a lower down payment (around 10-15%).
Standard Equipment Loans
SELs usually require a down payment of 20-30% and come with payment terms that range from 36-84 months, depending on who is providing the loan.
Fixed rate loans
Fixed rate loans will range from one to ten years and provide a fixed interest rate for the life of the loan term. The longer the term, the lower the payment, although you’ll end up paying more in the end in the form of interest.
Adjustable rate loans
Almost all adjustable rate loans offer one, three or five year fixed rates before converting to another fixed rate term of the same length but with a recalculated interest rate. Most loan providers will give you the option of switching to another product, such as fixed rate loan, at the end of the initial one, three or five year term.
For example, a five-year adjustable rate loan would have a fixed interest rate for the first 60 months. After 60 months, you would have the option to either roll into another 5-year fixed loan with a readjusted interest rate. Or, if you only had two year’s worth of payments remaining, you could switch to a shorter-term fixed rate loan, helping you take advantage of lower interest rates for the shorter term.
Variable rate loans
If you’re looking to find the lowest initial rate option, a variable rate loan could be the answer. But because rate terms can change every month depending on the performance of the stock market, a variable rate loan could lead to higher rates down the road.
Alternative Payment Terms
In order to better meet the needs of farmers, some financial providers offer a variety of payment term options, including annual, semi-annual, quarterly, monthly – even harvest payments.
Ways to apply
If a bank or finance company has a brick and mortar location near you, stopping by and speaking to a representative is almost always your best bet. Depending on the source, you can usually apply by phone, fax or through an online application.
About Mud Hog
The first and only technology of its kind, Mud Hog hydraulic rear-wheel drive systems are engineered to provide your front-wheel drive combines, cotton pickers and more with uncompromising four-wheel drive capability for increased agricultural production. By improving combine performance in all climate conditions – wet or dry – a Mud Hog can help you harvest faster, with less fuel, less compaction and less wear on your engine.