You should remember that being a farmer is not a cheap endeavor. Therefore, getting high-end and advanced equipment is one of the most considerable expenses farmers will face after purchasing a specific land.
According to the statistics, more than sixteen percent of crop value ends in investing in equipment. Since farm revenues are declining due to economic issues, farmers must make intelligent financial decisions when choosing to buy relevant equipment.
The main idea is to learn about different loans you can take (lån til traktor uten sikkerhet), which will provide you peace of mind.
You should determine whether a specific option can fit your budget, while you should create a strategy for how long a specific tractor, for instance, will pay itself off. Farming equipment can include anything from irrigation systems to tractors; in this article, we will focus on financing options for buying a tractor for your farming requirements.
Choosing the Right Option Based on Your Budget and Needs
You probably understand that choosing a tractor for purchase is not as simple as it seems. Of course, some people clearly know the model and brand they wish to get. Still, most people will consider two essential factors: price and power. Size is one of the most important factors that have a significant impact on the amount you will spend.
That is why farmers decide to compromise on features and horsepower to avoid going over the budget. In numerous situations, choosing a compromise will be counterproductive. Getting a too-small tractor for tackling a project may lead to an inability to handle the situations you are facing.
Of course, if you choose a too-powerful tractor for the job, it may cause severe problems as well. For instance, it may not work as efficiently when it reaches specific temperatures. Therefore, you should get a tractor that is a little bit larger than the one you need, meaning it will stay in your home if you wish to expand the land in the future.
Although you can find used models with low horsepower for less than ten thousand dollars, we recommend you expect to spend more. You will need at least twelve thousand for average, quality, and low-HP tractors. The expenses are only increasing for the better models with higher HP. Some of them can reach up to three hundred thousand dollars.
The main goal is to learn the size of a tractor you wish to get, which will help you spare the money you need to buy a new or used depending on the financing model you choose.
Financing Options You Can Choose
After determining the best tractor for your specific requirements, you will understand the budget you need for the process. The next step is exploring various financing solutions that will help you throughout the process.
Although you can buy smaller equipment with a tight budget, it is a way better option to take a loan to get the real deal. We can differentiate numerous advantages of financing the tractor purchases:
- Initial expenses and equipment financing are tax deductible, and you can use them as a business expense
- You can expand the farm faster by using the relevant equipment
- Prevent pitfalls of buying questionable equipment that others have used for years
- Savings labor and time expenses is a much better solution because you can finish the job faster and enjoy along the way
We can differentiate numerous loans you can take to purchase agricultural equipment, both nationally and locally. The best financing method depends on different factors, such as the size of your farm, where you live, your credit score, the size of the loan, and whether you qualify for special programs.
Remember that you can find numerous special programs and loan options by checking out the local lending institution. It is important to visit your bank and talk with a loan expert to learn about your options.
1. Conventional Loans
If you are an established farmer with creditworthiness, you can easily qualify for agricultural loans. They come with straightforward applications, low restrictions, and rates that will provide you peace of mind.
You can use them to purchase used or new equipment, depending on your preferences. At the same time, they come up with terms that range between one and five years. The main idea is to talk with a local lender and find various national rates through online means.
It is vital to understand that it is more flexible to work with your own bank, especially because they will offer you both national and local products. That way, you can choose the one that meets your needs, but you should search around for different options.
2. Financing Through the Dealership
In some situations, dealerships can offer you financing deals with low-interest rates, which is why you should check them out and determine the options before making up your mind. Still, if you wish to qualify for the best terms in a dealership, you need an outstanding financial record, and you must make a twenty percent down payment.
On the other hand, you will end up with higher interest rates. Borrowers should have perfect credit scores and have been in the farming business for at least two years to be eligible. In most cases, you will not get financing deals for used equipment.
In some situations, you will get an introductory period for a low-interest rate, which is why you should research different terms before making up your mind.
3. USDA-Backed Loans
Finally, you can take advantage of the USDA Farm Service Agency, which offers guaranteed loans for farmers by choosing a local lending institution.
Most of them feature government backup through the USDA, which will handle up to ninety-five percent of losses, meaning it will limit the risk lenders take when lending money to farmers who cannot qualify for conventional options.
At the same time, you will not get the limitation for purchasing new equipment. You can choose the amount that will provide you with variable terms between one and seven years, while interest rates depend on the local lending institution.
If you wish to apply, we recommend you visit a local bank and get the relevant forms you must fill out and submit. The USDA will offer you direct loans up to four hundred thousand dollars with fixed interest rates. However, the procedure is tedious and requires being patient until they approve you.
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