Farm Equipment Financing: How Farmers Fund Tractors, Combines, and Irrigation Systems

The combine that's been running your corn harvest for fifteen years finally showed its age last season. It cost you $40,000 in mid-harvest repairs, shut down for four days during peak conditions, and your agronomist told you the yield loss alone cost more than a new machine payment would have. You know you need to replace it. The question is whether you finance a new unit, go used, or keep throwing money at the old one.

A late-model combine runs $350,000–$500,000 new. Even a solid used unit with reasonable hours is $150,000–$250,000. That's not a decision you make out of the farm's operating account, and it's not something most traditional banks are set up to handle — at least not well.

Agricultural equipment financing has its own rules. Once you understand them, the path to new iron gets a lot clearer.

Why Agricultural Lending Is Different

Standard business lenders are nervous about farm operations for one simple reason: the income is seasonal. A corn or soybean operation might generate most of its cash in a 60–90 day window after harvest. To a traditional underwriter trained on monthly revenue statements, that pattern looks like twelve months of drought punctuated by a couple of good months. It makes no sense to them.

Agricultural lenders — whether that's Farm Credit Services, an FDIC-insured ag bank, a captive lender like John Deere Financial, or an independent equipment financing company that specializes in ag — know how to read a Schedule F. They understand that $0 in revenue from January through October, followed by $800,000 in November, is perfectly normal for a grain operation. That context changes everything about how your creditworthiness is evaluated.

The other factor that separates ag lending from standard equipment financing: land. Farmland is strong collateral. If you own meaningful acreage, lenders — especially agricultural lenders — can use that equity as additional collateral, which lowers their perceived risk and can unlock better rates or terms than your cash flow alone would support.

Rates for Farm Equipment Financing

Rates for agricultural equipment financing typically run 6%–14% depending on your credit profile, the age and type of equipment, and the lender you're working with.

Here's how the range breaks down:

| Borrower Profile | Typical Rate Range | |---|---| | Established operation, strong credit (700+), new equipment | 6%–8% | | Good credit (660–699), established farmer, newer used equipment | 8%–11% | | Beginning farmer or thinner credit profile | 10%–14% | | Older or specialty equipment with limited resale market | 11%–16% |

New equipment from major manufacturers (John Deere, Case IH, AGCO) tends to attract better rates because it's easier to value and more liquid in the secondary market. A 2024 John Deere S790 is a known asset with an established resale market. A ten-year-old specialty potato harvester is a much harder collateral conversation.

John Deere Financial and CNH Industrial vs. Independent Lenders

The two biggest captive ag equipment lenders — John Deere Financial and CNH Industrial Capital (which covers Case IH and New Holland) — are legitimate options worth evaluating. They run promotional programs, especially at slow inventory periods or end-of-model-year windows, that can feature rates as low as 0%–2.9% for qualified buyers. If you're buying new from that manufacturer and your credit is strong, those programs are hard to beat.

The catch: you're buying from that manufacturer. The promotional rate disappears if you want flexibility — buying used, mixing brands, or pulling equipment from an auction. And when a promotion isn't running, their standard rates aren't always the market's best.

Independent equipment lenders and brokers can finance multi-brand and used equipment, structure deals around your cash flow (balloon payments timed to harvest, for example), and work with situations that captive lenders are less flexible about — beginning farmers, non-standard equipment, operations with thin years on their recent tax returns.

FSA Loans and Beginning Farmer Programs

If you're a beginning farmer — typically defined as someone who has farmed for fewer than 10 years and doesn't own a farm larger than the area median — the USDA Farm Service Agency has programs worth understanding.

The FSA Farm Ownership Loan and Operating Loan programs are direct government lending products with rates set below market (currently in the 4%–7% range depending on the program). They have loan limits ($600,000 for direct ownership loans as of 2026), documentation requirements, and a longer approval timeline than private lenders — expect 30–60 days minimum.

More useful for equipment specifically is the FSA Guaranteed Loan program, where the FSA guarantees up to 95% of a loan made by a private agricultural lender. This lets you work with a local ag bank that knows your operation while reducing their risk enough to offer better terms than they'd otherwise provide. The private lender does the underwriting; the FSA backs the paper.

If you qualify as a beginning farmer, this program can be a meaningful advantage. The income limits and experience requirements matter, so talk to your local FSA office to confirm eligibility before building your financing plan around it.

Should You Lease Farm Equipment?

Here's the honest reality: most farmers prefer to own their equipment, and that preference usually makes financial sense. Farm equipment that's well-maintained holds value remarkably well. A quality tractor or combine with reasonable hours retains meaningful resale value over 10–15 years. Ownership means no mileage restrictions, no return-condition penalties, and the flexibility to modify equipment for your specific operation.

That said, leasing is worth considering in specific situations:

High-cost specialty equipment with uncertain long-term need. If you're adding a new crop type or expanding into a practice (like precision application equipment) that you're not certain will fit your operation long-term, a lease gives you an exit without the risk of owning depreciated equipment you don't need.

New technology with rapid improvement cycles. GPS guidance systems, autonomous driving modules, variable-rate application equipment — this technology is evolving fast enough that what's leading-edge today may be two generations behind in five years. Leasing keeps you from being married to technology that's aging.

For most core equipment — tractors, combines, planters, tillage — equipment financing and ownership is usually the right answer.

The Math on Financing a $350,000 Combine

Let's put concrete numbers on it. A used combine — say a 2021 John Deere S780 with 800 separator hours — is priced at $350,000. You're financing $315,000 after a 10% down payment of $35,000.

At 8% over 60 months: monthly payment is approximately $6,390. Total financing cost over the life of the loan: about $68,400.

At 10% over 60 months: monthly payment is approximately $6,695. Total financing cost: about $86,700.

That $2,300 difference in total cost between an 8% and a 10% rate isn't trivial, but context matters. If that combine helps you harvest 500 additional acres because you're not losing days to breakdowns — and your gross margin is $180 per acre — the incremental yield easily eclipses the rate difference.

The other comparison: custom hiring. At $30–$45 per acre for custom combining, 1,500 acres runs $45,000–$67,500 per year. Your own combine costs you roughly $76,700 per year (payment plus fuel, insurance, basic maintenance). You'd need to hit the right scale — and factor in timing control, which custom hirees can't always guarantee — to make ownership pencil.

Take Mike Breckner, a third-generation corn and soybean farmer in central Illinois running 2,200 acres. His aging combine was costing him a minimum of $35,000 a year in repairs and custom hire supplements. He financed a used 2022 Case IH Axial-Flow 9250 at 9% over 60 months through an independent agricultural lender that structured balloon payments aligned with his crop insurance settlement timeline. His machine payments replaced his repair budget almost dollar for dollar — and he stopped losing harvest days to breakdowns.

Getting Started

Use our equipment loan calculator to model your combine or tractor payment at different rates and terms before you sit down with a lender. Knowing your target monthly payment going in gives you leverage in the conversation.

For seasonal operations, ask explicitly about harvest-aligned payment structures — some agricultural lenders will structure payments to match your cash flow, with smaller payments during the growing season and larger payments in the fall. Not every lender offers this, but those who specialize in ag often do.

Get a quote and we'll connect you with lenders who understand how farm operations work — seasonal income and all.