Farm equipment financing is a loan or lease secured by the machine you are buying, such as a tractor, combine, planter, sprayer or irrigation pivot. Terms usually run two to seven years. Farm Credit’s AgDirect program posted fixed rates from 6.95% to 8.50% for September 17–30, 2026, and USDA’s FSA direct operating loan rate, which can also fund equipment, was 5.250% as of September 1, 2026.
This guide sits under our agriculture business loans hub. It covers where farm equipment loans come from, what they cost, how leasing compares, and what lenders check. For a single machine type, see tractor financing.
Where farm equipment financing comes from
There are five common sources, and many farms use more than one:
- Farm Credit associations and AgDirect. AgDirect describes itself as “an equipment financing program offered by Farm Credit Services of America and other lenders” and finances new and used equipment bought from dealers, auctions and private parties (AgDirect).
- Dealer and manufacturer finance. Brand finance companies often run promotional rates on new equipment. These offers change often and apply only to that brand.
- Commercial banks. Local ag banks finance equipment for existing customers, often alongside an operating line.
- USDA FSA. Direct operating loans of up to $400,000 can be used to buy farm equipment, and FSA guaranteed loans through approved lenders go higher (FSA).
- Independent equipment lenders. These lenders often handle used or older equipment, private-party sales, and borrowers who don’t fit bank or Farm Credit standards, usually at higher cost.
What farm equipment financing costs
Few lenders publish farm equipment rates. AgDirect does, and FSA publishes its rates, so they are useful benchmarks.
| Amount financed (AgDirect) | Fixed rate, 2–5 years | Fixed rate, 6–7 years | Variable rate |
|---|---|---|---|
| $250,000+ | 6.95% | 7.25% | 6.25% |
| $100,000–$249,999 | 7.25% | 7.50% | 6.25% |
| $25,000–$99,999 | 7.50% | 7.75% | 6.25% |
| $5,000–$24,999 | 8.25% | 8.50% | 6.25% |
Source: AgDirect, rates posted as effective September 17–30, 2026. AgDirect states that all rates and terms are subject to credit approval and that applications not funded within 45 days are subject to rate change.
Other published figures to compare against:
- FSA direct operating loan: 5.250% as of September 1, 2026, with equipment terms up to 7 years and no down payment requirement (FSA rates; FSA direct operating loans).
- SBA 7(a) caps: variable-rate 7(a) loans over $350,000 can’t exceed the base rate plus 3.0%, and loans of $50,000 or less can’t exceed the base rate plus 6.5% (SBA). With the prime rate at 7.00% on September 17, 2026 (Federal Reserve H.15), that caps a large variable 7(a) loan at 10.00%.
- SBA 504: for long-life machinery and equipment with at least 10 years of remaining useful life, with 10-, 20- and 25-year terms (SBA).
Rates from independent lenders for weaker credit or older equipment are not published in a consistent way, so compare written offers rather than advertised “as low as” rates. Our equipment loan calculator shows how rate and term change the payment.
Loan or lease?
With a loan (or installment contract) you own the equipment and build equity. With a lease you pay to use it and may buy it at the end. Farm Credit Mid-America notes that “leasing a tractor can offer lower annual payments and minimize upfront costs” (Farm Credit Mid-America).
| Equipment loan | Lease | |
|---|---|---|
| Ownership | You own it from day one; lender holds a lien | Lessor owns it; buyout options vary |
| Upfront cost | Down payment often required, though some lenders offer $0 down on approval | Often lower |
| Payments | Principal and interest | Usually lower annual payments |
| Tax treatment | Owned property may qualify for Section 179 and bonus depreciation | Treated differently from a purchase; confirm with your tax advisor |
| Best for | Equipment you’ll keep for its full life | Equipment you’ll replace on a schedule |
For a deeper tax comparison, see equipment financing vs. leasing.
Tax: Section 179 and bonus depreciation
For tax years beginning in 2026, the Section 179 expensing limit is $2,560,000, reduced dollar for dollar once the cost of qualifying property placed in service during the year exceeds $4,090,000 (IRS Rev. Proc. 2025-32). Separately, the IRS says the One, Big, Beautiful Bill “provides a permanent 100-percent additional first year depreciation deduction for qualified property acquired… after Jan. 19, 2025” (IRS). IRS Publication 946 lists leased property among property that does not qualify for Section 179 (IRS Pub. 946). Talk to your tax preparer before you choose between a loan and a lease, since the deduction depends on your income and the equipment.
What lenders look for
- The equipment. Age, hours, make and resale value drive the loan-to-value and term. AgDirect’s auction and private-party program lists a sales price minimum of $25,000 for used machinery and titled equipment (AgDirect).
- Cash flow. Recent tax returns and a projection that shows the payment fits alongside operating costs and existing debt.
- Credit history. Personal and business credit for the owners.
- Down payment or trade-in. A trade-in can cover the down payment. AgDirect advertises “as low as $0 down,” subject to credit approval (AgDirect).
- Existing liens. If your bank holds a blanket lien, the new lender may need a subordination or a release on the new machine.
Financing used equipment and private-party sales
Used equipment usually costs less but can come with shorter terms because lenders set terms by remaining useful life. Auction and private-party purchases need extra paperwork, such as a bill of sale, serial numbers and lien searches. Our guide to used equipment financing and leasing covers the process, and heavy equipment financing covers machines that cross over from construction, such as loaders and skid steers.
Pitfalls to avoid
- Taking a promotional rate without comparing the cash price. Dealer rate promotions can come with a higher price or a lost cash rebate. Compare the total cost of both.
- A term longer than the machine’s working life. You don’t want to owe money on equipment you’ve already replaced.
- Monthly payments on a seasonal income. Ask the lender whether annual or semi-annual payments are available and structure the loan around when you sell.
- Using your operating line. Buying equipment on operating credit ties up money you need for inputs. Farm Credit Mid-America advises dedicated equipment loans instead (Farm Credit Mid-America).
- Forgetting rate locks. AgDirect notes that applications not funded within 45 days are subject to rate change (AgDirect).
Frequently asked questions
How long can you finance farm equipment?
It depends on the lender and the equipment. AgDirect offers terms up to seven years on most equipment and up to 10 years on pivots (AgDirect). FSA direct operating loans for equipment run up to 7 years (FSA). SBA 504 offers 10-, 20- and 25-year terms for long-life equipment (SBA).
Can I finance farm equipment with no money down?
Some lenders offer it. AgDirect advertises as low as $0 down on approval, and FSA direct operating loans have no down payment requirement. See equipment financing with no money down for how lenders decide.
Can I finance equipment bought at auction?
Yes, with lenders that handle auction and private-party sales. AgDirect, for example, finances used machinery and titled equipment bought at auction or from private parties with a $25,000 sales price minimum (AgDirect).
Is it better to get dealer financing or a Farm Credit loan?
Compare them on total cost. A promotional dealer rate may beat a Farm Credit rate on new equipment of that brand. A Farm Credit or independent loan may work better for used equipment, mixed brands or private-party sales.
Next step
If you want to compare equipment offers against what your dealer or bank has quoted, our equipment financing page explains how SMB Compass works with its lending partners. We’re a broker, so we compare offers from the lenders we work with and you decide which one to take.
Sources
- AgDirect: rates and program details
- FSA: Current FSA loan interest rates
- FSA: Farm Operating Loans
- FSA: Direct Farm Operating Loans
- SBA: 7(a) loans
- SBA: 504 loans
- Federal Reserve: H.15 Selected Interest Rates
- IRS: Rev. Proc. 2025-32
- IRS: Guidance on additional first year depreciation
- IRS: Publication 946
- Farm Credit Mid-America: How to Finance Tractors Wisely
About this page. Written by Ezra Cabrera, Content Team Lead at SMB Compass. Figures were checked against the primary sources listed above on September 21, 2026; lenders change their terms, so confirm current terms before you apply, and let us know if you spot a figure that has changed. SMB Compass is a business financing broker: we don’t lend our own money, and we are paid by the lenders we place loans with. This page is general information, not financial, legal or tax advice.