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Compare your tractor financing options

Loans or leases, here’s where you might find the best deal on your next tractor purchase.

Tractors are for more than just farming. True, they can be used to clear land, feed livestock and harvest produce. But they’re also ideal for construction, landscaping and shoveling snow.

Finding a use for a tractor is easy. But paying for one is a bit more complicated if you don’t have the money upfront. We take a look at your financing options to help you decide which is best for your needs.

OnDeck Small Business Loans

OnDeck Small Business Loans

Among the largest online business lenders offering term loans and lines of credit at competitive fixed rates.

  • Minimum Amount: $5,000
  • Maximum Amount: $500,000
  • Loan Term: 3 to 36 months
  • Simple online application process with fast decisions
  • Dedicated loan specialists and loyalty benefits
  • Must have been in business for at least one year with annual revenue of $100,000+
  • Must have a personal credit score of 500+

    What is tractor financing?

    Tractor financing is a way to purchase or borrow a tractor when you don’t have the money to buy it upfront. The two most common tractor financing options are equipment loans and equipment leasing.
    Equipment loans

    An equipment loan provides a lump sum of money that you can use to cover the cost of a new or used tractor. Your loan is typically secured by the tractor or other farming equipment you’re buying with it, which can result in decent interest rates — whether fixed or variable. And you’ll pay interest on what you borrow through monthly repayments.

    The best deals on equipment loans tend to go to businesses that have been around for at least two years, have excellent credit and are looking to buy a new tractor.

    Banks, credit unions and online lenders often offer business equipment loans, but you might find a better deal through a dealership like Kubota or John Deere. Monthly payments for loans tend to be higher than you’ll find with a lease, but you end up owning the vehicle once it’s fully repaid. It can also be cheaper in the long run if you plan to use the vehicle for a long time.

    Top four online lenders to consider for a tractor purchase

    Manufacturers are known for offering solid deals. But you might find similar options with an online lender offering competitive rates and flexible terms.

    LenderWhat can it offer?
    OnDeckUse one of OnDeck’s business term loans to buy or lease a tractor. It accepts personal credit scores of 500+, but you might not qualify if your business is too new or too small for its requirements.
    National Business CapitalNational Business Capital offers equipment financing to business owners with almost any credit score. It has a high approval rate with quick turnaround and doesn’t require collateral.
    Swift CapitalThough Swift Capital doesn’t explicitly offer an equipment loan, you can get a business advance to cover the cost of your new tractor. Repeat customers are rewarded with better rates and terms. You could have trouble getting financing if you’re just starting out, however.
    Excel Capital ManagementExcel Capital Management offers equipment financing that often doesn’t require a down payment, and leases come with an option to buy. You need good credit to qualify, however, and the process can take longer than with other lenders.

    Tractor leasing

    An equipment lease is an extended rental contract for a tractor or other farming equipment. As with any lease, you make payments on the equipment as long as you’re using it. But payments can be lower than those that come with a loans, because you aren’t paying off the tractor’s full cost.

    Leasing can be a solid option for new businesses, those that have a low credit score or if you aren’t looking to use the tractor over a long time. It can also free up your capital for other business purchases or investments.

    Aside from lower payments, you won’t need to worry about your tractor’s value decreasing over time. And if you do fall in love with it, most lenders give you the option of buying it at the end of your lease with one large payment (though taking out a loan is generally a better deal).

    You must…
    TermsWhere to get one
    Equipment loansGood long-term value: You make higher payments over a short time, but you own the tractor at the end of your loan.

    Typical tractor loan cost: $17,030.36 Typical loan: $15,000 at 12% APR over 24 months

    Be a US citizen or resident and prove you’re able afford payments.24–84 monthsTractor dealerships, banks, credit unions, online lender
    Equipment leasingGood short-term value: You make lower payments over any period of time, often with the option of buying the tractor in the end.

    Typical tractor lease cost: $6,144 to lease a $15,000 tractor with 9% APR over 24 months. You’ll have to pay at least $11,250 at the end if you want to own it.

    Be a US citizen or resident and prove you can afford payments.12–72 monthsTractor dealerships, banks, credit unions, online lenders
    Tax benefits of loans vs. leases
    There’s lots of talk about how leasing a tractor can save you big on your taxes. Some say that your lease payments are deductible, compared with only part of the cost of a new tractor.

    But there’s a catch: The IRS might not consider your tractor lease a true lease if it offers a buyout option at the end. If saving on your taxes is a deciding factor, consult a tax professional to make sure you’re getting a good deal.

    Compare the differences between equipment loans and leases

    Top tractor financing providers

    Unlike other equipment, it’s common to get tractors financing directly from a manufacturer dealership — and they can offer better deals than you’ll find with a traditional lender.

    Here’s an overview of some of the most popular tractor manufacturers in the US that offer leasing and loan options.

    ManufacturerWhat does it offer?
    John DeereJohn Deere’s big name means you probably won’t have trouble finding a dealership near you. But it also means it can get away with bigger price tags than other manufacturers.

    John Deere’s loans and leases don’t come with prepayment fees and sometimes offer 0% interest for the first six months. You might have to make a large down payment on loans, however, and rates can be high after the intro period.

    KubotaKubota is arguably the second most recognized tractor brand in the US. It offers periodic promotional 0% to 4.99% APR loans requiring no down payments, although standard APRs hover around 6%. Borrowers say it’s also more forgiving than John Deere if you have fair to poor credit.
    TYMTYM tractors tend to be cheaper that Kubota and John Deere, but it could be hard to find a good promotional rate. Still, your overall costs could be lower — TYM’s standard APR tends to be lower than the competition. You might sacrifice quality, however: TYM tractors can be prone to breaking down more often, and finding parts can be more difficult.
    Kioti TractorsKioti is an up-and-coming tractor manufacturer that started offering financing in 2011. Its promotional deals lean toward rebates and free equipment, rather than lower rates. It also has a more limited dealership network than some of the bigger names.

    More online business financing options to compare

    Rates last updated October 18th, 2017
    Name Product Product Description Min Loan Amount Maximum Loan Amount Requirements
    OnDeck Small Business Loans
    A leading online business lender offering flexible financing at competitive fixed rates.
    Must have been in business for at least one year with annual revenue of $100K+. Must have a personal credit score of 500+.
    Swift Capital Business Advance
    Fund Your Business with a Working Capital Advance – Fast. Simple. Affordable.
    You must be an American citizen or a permanent resident of the US with a personal FICO score of 500 or higher. Your business must be at least 1 year old and making at least $100,000 in annual revenue.
    Excel Capital Management Small Business Loans
    Get personalized financing options that suit your unique business needs in just a few simple steps.
    Varies by loan type
    Varies by loan type
    Your business must operate in the US, be at least 6 months old and have monthly revenue of at least $15,000.
    SmartBiz SBA Loans
    Get funding for your small business with a government-backed loan and extended repayment terms.
    Must have personal credit score of 650 or higher; Must be a US citizen or permanent resident; Business must be 2+ years old; Annual revenue of $50,000 or more; No outstanding tax liens and no bankruptcies or foreclosures in the past 3 years
    LendingClub Business Loans
    With loan terms that vary from 1 to 5 years, enjoy fixed monthly payments and no prepayment penalties through this award-winning lender.
    2+ years in business; $75,000+ in yearly sales; No bankruptcies or tax liens; At least 20% ownership of your business; Fair or better personal credit
    Kabbage Small Business Line of Credit
    A simple, convenient online application could securely get the funds you need to grow your business.
    Must have been in business for at least 1 year. Revenue minimum is $50,000 annually or $4,200 per month over the last 3 months.

    Compare up to 4 providers

    If you own a farm, you could benefit from government financing

    The US Department of Agriculture’s Farm Service Agency offers operating loans that you can use to buy a tractor. Funding comes from the USDA’s budget, and interest rates are determined by the government, rather than your credit history.

    They’re an affordable opportunity for young farmers and those just starting out. The FSA also offers programs for women, minority and veteran farmers.

    Beginner farm financing options

    Bottom line

    Financing your tractor can be a little different than financing for other types of equipment. You can find traditional business term loans from banks, credit unions and online lenders. But you may want to consider manufacturer dealerships, which tend to be the heart of the tractor-financing industry.

    Then, just because they’re the heart doesn’t mean they have the best deal. Compare your full range of business financing options to find the best loan you qualify for.

    Frequently asked questions

    Depending on where you live, you might be able to find some deals on older models in the winter. But don’t let this limit your search — you can find good deals any time of year. A better strategy might be to plan ahead, rather than wait for when you really need a tractor. That way you have time to make a careful comparison.

    Look for a lender that accepts lower personal credit scores. For example, credit unions can be a good option because your established banking history may matter more than an external credit score. Learn more about bad credit business loans.

    Yes, but you typically won’t get the lower rates you’ll see after you’ve been around for a couple years. Be prepared to put something down for collateral and budget more than $1,000 in monthly payments.

    It depends on what kinds of projects you need a tractor for, and that tends to matter more than farm size. Smaller projects like spreading fertilizer are great for compact tractors, but harvesting a large crop might call for a bigger machine.

    Aside from size, consider variables like horsepower, lift capacity and types of transmission to find a tractor that fits your needs. Owners of larger farms might want to consider investing in a quality machine with a longer lifespan that can handle your acreage.

    Anna Serio

    Anna Serio is a writer who loves to eat, travel and save money.

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