Farm machinery is one of the biggest costs a farm business carries. A new tractor or harvester can easily cost upwards of $300,000 or even $500,000, so most buyers spread the cost instead of paying cash. Farm machinery finance lets you do that while keeping working capital free for seed, fuel and fertiliser.
Whether you’re a broadacre grain grower upgrading a harvester, a grazier replacing a tractor or a horticulturalist expanding your irrigation setup, the right agriculture equipment finance depends on your cash flow, your tax position and whether you want to own the machinery outright.
What is farm machinery finance?
Farm machinery finance is a loan or lease that lets a farm business buy or use equipment without paying the full price upfront. The machinery itself usually secures the finance, which is why rates are typically lower than on an unsecured business loan.
Loan terms commonly run up to seven years and leases up to five. Repayments can be weekly, fortnightly or monthly, and many lenders offer deposit-free and balloon options for loans (residual payments are typically required for leases).
There often isn’t a hard cap on how much you can borrow, because the asset secures the finance. What financiers look at instead is your business: turnover, existing debts, credit history and your overall capacity to manage your finance payments across the term.
What finance options are available for farm machinery?
The right structure depends on your cash flow, your tax position and whether you want to own the machinery. Here’s how the five most common options compare:
| Finance | Who owns the machinery | Tax and GST | Best for |
|---|---|---|---|
| Chattel mortgage | You, from day one. The lender holds a mortgage over it until the loan is repaid | You can typically claim the GST credit upfront, plus deductions for interest and depreciation (business-use portion). | Established farms buying high-value equipment such as tractors and harvesters, where borrowing is usually limited by the asset’s value and your capacity to repay |
| Finance lease | The financier. At the end of the term, you can usually buy the machinery, sell it or refinance the residual and extend the lease | Lease payments may be fully tax-deductible, with GST claimable on each payment | Farms that upgrade equipment regularly and prefer lower upfront costs |
| Operating lease | The financier. You return the machinery at the end of the term, with no option to buy | Lease payments may be fully tax-deductible, with GST claimable on each payment | Seasonal or project-based needs, or farms that would rather hand machinery back than sell it |
| Hire purchase | The financier until your final payment, then you | Interest and depreciation are generally deductible, with GST usually claimed as you pay | Farms that want ownership at the end of the term. Less commonly offered today and usually costs more than a chattel mortgage |
| Unsecured business loan | You. No security is held over the machinery | Interest is generally deductible | Older or specialised machinery, or several smaller purchases under one facility. Rates are higher and amounts are often capped at $250,000 to $300,000. |
Tax treatment depends on how much you use the machinery for business purposes and on your accounting method, so speak to your accountant if you’re unsure which option is best suited to your needs.
What types of farm machinery can I finance?
Most financiers will consider a wide range of new and used agricultural equipment, whether you’re buying from a dealer, an auction or a private seller. Commonly financed farm machinery includes:
- Tractors: from compact utility models to high horsepower broadacre machines
- Harvesters and headers: combine harvesters, grain headers and forage harvesters
- Seeding and tillage equipment: air seeders, seed drills, cultivators and disc ploughs
- Sprayers: self-propelled boom sprayers, trailed sprayers and spot sprayers
- Hay and silage equipment: balers, mowers, rakes, tedders and silage wagons
- Livestock handling equipment: yards, crushes, weighing systems and auto drafting equipment
- Dairy equipment: milking machines, rotary dairies and vat cooling systems
- Irrigation systems: centre pivots, pumps and drip lines
- Grain storage: silos, augers and aeration systems
- Trucks and trailers: farm vehicles used to transport grain, livestock or produce, which you can also explore through truck finance
- ATVs and utility vehicles: off-road vehicles used to move around the property
- Earthmoving and land management equipment: dozers, graders and laser levelling equipment used for on-farm purposes
Lenders generally need the machinery to be identifiable, hold its value and be used for business purposes. Older or more specialised equipment can sometimes be harder to place with mainstream lenders, so working with a broker like Savvy gives you access to a wider panel of financiers with genuine agricultural expertise.
Can I take out farm machinery finance if my business’ income is seasonal?
Yes, many agricultural financiers can set repayments around your cash flow, with options that can include:
- Seasonal or stepped repayments: higher after harvest or livestock sales, lower through planting and growing months
- Quarterly or half-yearly repayments: fewer, larger instalments instead of monthly payments
- Interest-only periods: reduced payments when expenses are highest
- Balloon or residual payments: a lump sum deferred to the end of the term, which lowers regular repayments but must be paid out, refinanced or offset through a sale or trade-in
The structure is agreed upfront, so discuss your income pattern with your financier or broker before you apply. Lenders typically assess seasonal applications across several years of trading, and some will take drought, flood or falling commodity prices into account if you can show evidence.
New vs used farm machinery finance
You can finance both new and used farm machinery, but financiers treat them differently. New machinery typically attracts the lowest rates and longest terms, as its value is both easier to predict and higher than used. Some lenders will fund up to the full purchase price, so a deposit may not be needed.
Used machinery can offer better value for money, as many assets will already have the bulk of their depreciation behind them, but rates rise with age. Here’s how average rates changed among the ten lowest rates available for plant and machinery finance through Savvy when applied to assets of different ages:
| Machinery age | Average rate |
|---|---|
| Brand-new | 7.97% p.a. |
| 5 years old | 8.53% p.a. |
| 6 years old | 9.14% p.a. |
| Average rate based on the ten lowest rates available for an $80,000 asset of each listed age. Rates and averages correct as of October 2026. | |
As you can see, the gap between the average lowest rates for brand-new machinery and a six-year-old model is almost 1.2 percentage points. On an $80,000, five-year loan repaid monthly, that adds more than $2,700 in interest over the term (before fees), so it’s important to weigh this up against potential retail price savings before you buy.
New vs used farm machinery finance age limits
Many financiers also limit how old the machinery can be by the end of the term. They’ll look at the age, condition, hours of use and resale value, and newer used models from recognised brands are generally easier to finance. A deposit can often help secure a better rate on older machinery.
If the machinery is too old or specialised for a standard loan or lease, an unsecured business loan may be an alternative.
How much will my farm equipment finance deal cost?
There’s a range of factors that can impact the cost of your farm equipment loan. One prominent one is your loan’s interest rate. You can see how great a difference even small rate changes can have on a chattel mortgage for a tractor here:
2026 John Deere 6M 200 Utility Tractor
| Tractor cost | Interest rate | Monthly repayment | Total interest paid |
|---|---|---|---|
| $318,965 | 7.24% p.a. | $6,352 | $62,159 |
| $318,965 | 7.34% p.a. | $6,367 | $63,066 |
| $318,965 | 7.69% p.a. | $6,420 | $66,250 |
| $318,965 | 7.99% p.a. | $6,466 | $68,991 |
| $318,965 | 8.64% p.a. | $6,566 | $74,971 |
|
$318,965 $318,965 $318,965 $318,965 $318,965 |
|
7.24% p.a. 7.34% p.a. 7.69% p.a. 7.99% p.a. 8.64% p.a. |
|
$6,352 $6,367 $6,420 $6,466 $6,566 |
|
$62,159 $63,066 $66,250 $68,991 $74,971 |
Calculations based on a five-year chattel mortgage with no deposit or balloon payment, and exclude fees. Rates are for illustrative purposes only.
Other factors that affect the cost of your deal include:
- Loan or lease term: a longer term lowers your payments but increases the total interest paid
- Deposit: a larger deposit on a commercial loan reduces the amount you borrow and the interest you pay
- Balloon or residual: lowers your regular repayments by deferring a lump sum to the end of the term, but increases the overall interest bill and needs to be paid out or refinanced
- Repayment frequency: weekly or fortnightly repayments can reduce the total interest compared with monthly
Fees to look out for
Although comparison rates aren’t required to be displayed for commercial lending products in Australia, it’s still worth asking about the fees on your finance deal. These can include:
- Establishment fees: the lender’s setup costs, which some lenders waive for strong applications
- Account keeping fees: ongoing monthly or annual charges, which not all lenders apply
- Documentation fees: the cost of preparing your loan contract, usually charged once at settlement
- PPSR registration: a small fee to register the lender’s security over the machinery may be charged
- Early payout fees: charges for repaying the loan before the end of the term, which vary widely between lenders
Case study: A broadacre grower replaces an ageing tractor
A grain grower running a 1,500-hectare cropping operation needs to replace a 20-year-old tractor ahead of seeding. They find a 2017 Case IH Magnum 340 priced at $270,000, but paying for it in cash would drain the working capital needed for seed, fuel and fertiliser.
The grower puts down a 10% deposit of $27,000 and takes out a five-year chattel mortgage for the remaining $243,000 at 9.50% p.a. Repayments come to about $5,103 a month, with around $63,207 in total interest over the term. Because the grower owns the tractor from day one, the business can claim the GST credit on the purchase and deductions for interest and depreciation (business-use portion), subject to advice from their accountant.
The tractor is in the paddock for seeding, and the grower keeps their cash reserves for the season’s running costs. If cash flow were tighter after a poor harvest, a broker could also explore seasonal repayments or a balloon payment to lower the monthly amount.
How to apply for farm machinery finance with Savvy
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Complete our simple online application form
Tell us about your business, its finances and the machinery you’re looking to buy or lease.
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Send through any required documents
We’ll need to verify things like your identity and your business’ financial situation in most cases.
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Have a chat to your Savvy broker
Once we have all the information, your broker will call you to discuss your available finance options.
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Have your application prepped and submitted
They’ll get to work preparing your application for formal submission to your lender.
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Receive formal approval
Once you’re formally approved, your broker will let you know about the next steps.
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Sign, settle and receive your farm machinery
Sign off on all the final contracts, have settlement sorted for you and the machinery is all yours!
Why apply for a business loan with Savvy?
What documents do I need for my farm machinery finance application?
The documents lenders ask for depend on the size of the facility and your financial position, but most applications include:
- Identification: photo ID such as a driver’s licence or passport
- Business assets and liabilities: confirm whether your business has any other assets in its name, as well as outstanding debts
- Machinery details: a quote or invoice from the seller, including the make, model and year
- Bank statements: recent business bank statements, usually covering the last three to six months
- Financial records: completed financials from the most recent year, which can include your most recent BAS, a trust deed and any amendments
If your records are limited, a low doc loan may be an option. These rely on less paperwork, such as shorter bank statement periods, but may come with a higher rate or require a deposit or additional security. Your broker will confirm exactly what’s needed for your application, so you only provide what your lender requires.
Can I take out a loan to purchase farmland?
Yes, you can finance agricultural land with a commercial property loan, which works in a similar way to a standard home loan but is designed for land bought for business use.
The main differences are that commercial property loans often have shorter terms, from one to 15 years (sometimes less than one year), and stricter loan to value ratio (LVR) limits, such as capping your borrowing at 70% to 80% of the property’s value.
Vacant or undeveloped land can be harder to finance than land with existing infrastructure, water access or a dwelling. Lenders view bare land as higher risk because it earns less income and has a lower resale value, which can mean a lower LVR limit and a higher interest rate.
First-time farmers and families planning succession may also be eligible for a government-backed AgriStarter Loan, which offers up to $2 million. It can be used to buy an existing farm business or land, fund succession arrangements or invest in infrastructure and machinery. The loan runs for ten years with the first five years interest only, and at least 50% of your total debt must remain with a commercial lender.
