Getting a tractor financed isn’t as easy as it used to be. Prices are still trending on the high side while commodity prices are still trending low. Multiple equipment payments can weigh heavily on a farm operation’s cash flow, this is why it is important to explore multiple avenues to getting your “tractor financed.” Financed can refer to a loan or a lease, while ARM doesn’t provide traditional tractor loans, we offer equipment leasing options through trusted partners, and we’re specialists in crop-based financing. Let’s discuss what to consider when you need to finance your next piece of equipment.
Traditional Tractor Financing Explained
The first thought of many is probably to call the bank or work with the dealership on a loan. This is probably considered the most “traditional route” of financing tractors for the farm community. Bank or dealership loans are not bad options, but they may not be the best for you. Eligibility may be an issue for some when it comes to down payment requirements or meeting financial standards. Also, farmers must consider how much of a payment can fit into their cash flow. A 5-year loan that requires 20% down, might not be in the cards for everyone. This is where leasing can help ease some burden.
Leasing a Tractor Through ARM’s Partners
Leasing can provide some flexibility to cash flow by lessening payments as well as add some possible tax advantages. Leases can be structured to mirror an equipment loan with a $1 buyout at the end if a farmer wishes to own the tractor at the end of the lease. Or if the farmer knows they will want to trade in a couple years they can set the lease up with a residual at the end to lessen the payment. This will allow them to build some equity into the tractor as they make the lease payments, then trade into what they want next without having to deal with depreciation recapture (operating leases). ARM works with multiple partners to get farmers’ equipment needs met.
Alternative Options: Crop Loans for Equipment Costs
At heart, ARM is a crop line of credit provider. ARM’s loan officers have a deep understanding of the needs associated with farm operations. By offering leasing options through our partners, ARM can meet all our farmers’ needs, whether it be financing a tractor or 1,500 acres of corn and soybeans. If you need an operating line as well, learn more about our crop financing solutions.
Special Scenarios
By working with multiple partners on equipment financing, ARM can cast a wide net to cover most farmers with varying levels of eligibility. Many ask if you can still get a lease with bad credit, I ask you to define “bad credit.” The minimum score is 645 and scores below can be considered, but may need a cosigner on the lease with them.
Why Choose ARM for Your Agricultural Needs?
ARM has a high level of expertise in the agriculture lending space. ARM can offer crop financing, farm real estate financing, equipment leasing, and crop insurance. It takes a lot of knowledge to manage a diverse array of products, and we have the team to do it! At ARM you can work with one loan officer and have access to all the products mentioned, talk about simplicity! Although ARM specializes in crop loans, all our various options give us the ability to create custom solutions for farmers. Need a tractor financed? Need a crop loan but have bad credit? No matter the problem, call ARM to discuss a possible solution.
Conclusion
In today’s farming economy, financing a tractor – or any major piece of equipment – requires more than just walking into a bank. With rising equipment costs and tighter cash flow, it’s critical to evaluate all your options. By connecting you with our trusted partners through our experienced Loan Officers, ARM is here to help you make the best decision for your operation. Let’s talk about your goals and find a solution that works for your farm – today, and for seasons to come.
FAQs
- Can I lease a tractor with bad credit?
- Depends on how bad it is. A minimum of 645 is required, but below 645 can be considered by adding a cosigner.
- What’s the difference between a crop loan and equipment financing?
- A crop loan is for inputs to plant and harvest a crop. Equipment financing is to acquire equipment needed to plant, harvest, or maintain your crops.
- What are the typical lease terms for tractors?
- There is no typical term, there is an array of options to make flexible solutions possible.
- How does the application process work?
- Depending on the product being applied for, either just an application and DL are required, or application, DL, balance sheet, and tax returns are required.
- How do I qualify for tractor leasing?
- Reach out to ARM to discuss the options available and determine if you are a candidate?
- Are crop loans a good option for covering tractor costs?
- No. Crop loans are for inputs into the crop and fixed costs associated with the crop, not capital expenditures. It is not prudent to purchase a multi-year asset with a 1-year crop loan.
Disclaimer: The information provided in this publication is for educational and informational purposes only and does not constitute legal, financial, tax, or securities or investment advice. Nothing herein is a commitment to lend or a guarantee of credit approval. All financing is subject to standard credit and collateral underwriting criteria and may not be available in all states or for all applicants. Terms, conditions, and restrictions apply. The purchase of crop insurance through ARM or its affiliates is not required as a condition of credit approval. Information contained in this publication is subject to change without notice.