Info on financing a used tractor

[EddieWalker]

I recently paid off the loan on my wife's mini van and I'm thinking about buying another tractor. I don't really need it right now, so I'm not in any rush, but there are a few out there that kind of interest me. I'm not ready to go and look at them in person, I'm just kind of curious how the financing works. I have a pretty good credit score, and I always get the lowest interest rates offered.

If you have bought used recently and financed, what kind of interest rate did you get? How long where your choices in the loan?

I like to get the longest loan possible so I have the smallest payment possible, and then make two payments a month when I can. I always pay off the loan ahead of time. Being self employed, this has proven to work well for me without adding too much stress to my life. How many months can you get a loan for?

I'm also trying to see where I would be comfortable at with monthly payments. Prices for the tractors that I like are from $35,000 for something that will work, to $55,000 for something that I would really want to have, but really don't need.

Thank you

 

[Username Taken]

Get a HELOC

 

[kenmac]

I recently paid off the loan on my wife's mini van and I'm thinking about buying another tractor. I don't really need it right now, so I'm not in any rush, but there are a few out there that kind of interest me. I'm not ready to go and look at them in person, I'm just kind of curious how the financing works. I have a pretty good credit score, and I always get the lowest interest rates offered.

If you have bought used recently and financed, what kind of interest rate did you get? How long where your choices in the loan?

I like to get the longest loan possible so I have the smallest payment possible, and then make two payments a month when I can. I always pay off the loan ahead of time. Being self employed, this has proven to work well for me without adding too much stress to my life. How many months can you get a loan for?

I'm also trying to see where I would be comfortable at with monthly payments. Prices for the tractors that I like are from $35,000 for something that will work, to $55,000 for something that I would really want to have, but really don't need.

Thank you

When I bought my large tractor. My financial advisor wanted me to finance. So ,I did.
I got a CU loan for 36,000. Cost me 700 per mo not including insurance which the lender required.
I believe the interest rate was close to 4%
I didn't like making payments and insurance. So I paid it off against his advice.

 

[notaz3]

My philosophy is; If it's not going to make me money, I'm not going to pay the bank for it.
If it's a NEED for my business I may get loans. If it's a WANT I pay cash.

 

[rScotty]

All my life I've known that if I wanted something that I couldn't afford, I could simply go out and find an older one cheap enough that I could pay cash for and fix it up.

And more than once done just that. It's kept me out of debt, and been learning and entertaining....but it has also eaten up a lot of my time....valuable time when I could have been just as happy doing nothing at all.

We are lucky to live in a country where anyone can do either of the above.

rScotty

 

[Diggin It]

When I was starting to shop, I looked at a BXsomething with backhoe. Seller wanted $13,500 or so. Credit Union wanted close to 10% since it would be an unsecured personal loan and they weren't even sure they could do it for that amount regardless of my credit history.

There is absolutely no way I'd ever risk house and/or property to finance a machine. Equity lines are just begging for trouble.

I can't imagine an advisor recommending paying interest unless paying in full would take funds out of something making more interest. It was something I looked at, but I would have been taking funds out of an account that had a history of increasing by 10-15% per year vs. paying 3% interest on the loan. I've been paying extra every month and have made a couple of extra payments when I could, so I'm on track to pay it off about two years early.

Length of term was another issue. For used, they would only go something like three years as I recall which would have made the payments higher.

Not everyone wants to take on some else's machine problems in hopes of coming out ahead by buying older and lower priced. Neighbor picked up a JD 2020 that he knew needed work. He hasn't stopped pouring money into it yet.

 

[Cahaba Valley Farm]

Neighbor picked up a JD 2020 that he knew needed work. He hasn't stopped pouring money into it yet.

What's been wrong with it?

 

[Cahaba Valley Farm]

Prices for the tractors that I like are from $35,000 for something that will work, to $55,000 for something that I would really want to have, but really don't need.

My question to you is why would you want to purchase something that expensive and take on that much debt liability if you don't really need it?

 

[Torvy]

Every financial situation is different. Interest rates have been so low for so long that in many cases it is ludicrous not to finance. That money you pay could easily make 10% or more in the market. So, unless your APR is over about 7%, financing can be an advantage. In some states, interest can reduce your tax liability. Truly a situation where YMMV.

For me, I agree that it only applies to things I think I need. I could see for some people 'wants' make you happy and you spent your life earning the money, so the added expense of a loan is worth it.

To the OP question, there are a ton of variables. Find a lender who typically does AG loans. They can take equipment as collateral, usually with a UCC filing. Helocs have their place, but I would not tie up my home equity for anything unrelated to improving the value of my property... buildings and such. Get pre-qualified so you know what you are getting into before you get attached to a tractor or a 'deal'.

 

[hugo454]

home equity loan

 

[Jstpssng]

I took out a 4 year loan through my CU in 2017 with 2.25% interest, and paid it off a year early. If I'd bought new rather than used I would have saved .25%.
I like having my home nearly paid off and have tried the "buy old and fix up" routine on pickups which always ends up being a money pit. I can do minor things but repairs such as head gaskets and clutches I need to hire out; it doesn't take long before I have close to the price of a new vehicle tied up in repairs and still own a piece of junk.
I was saving for a new tractor when my old L275 started going to pieces... every time that I used it something else broke. My choices were to pay somebody to do the work or take out a loan. My plan was to cut enough wood off my property to make the payments but that never happened so while I now have the tractor paid off, I still have the wood to fall back on if I ever need to make some extra money.

 

[EddieWalker]

Thank you for your replies

 

[finn1]

I bought mine new, and financed it through the credit union. Rates varied with the length of the loan. I think the sweet spot was three or four years, although longer terms were available at higher rates. Beyond some term, maybe five or seven years, the rate would revert to whatever the then current rate was.

Used tractors that were two or three years old were possible to finance at the same rate as new, with higher rates for units older than that.

When I bought, rates were low enough that you would have been crazy to not finance the tractor, at least up to the point that the payments might affect your cash flow and lifestyle.

I kept the bulk of the money the tractor cost in the stock market, did a nominal down payment , something like $7000, and financed the rest. Frankly, I made out like a bandit, as the money left in the market had roughly 25% annual returns over the period of the 2.7% loan.

 

[arrow]

I am always in amazement when a question is asked and people feel compelled to relate their own personal quirks and beliefs to whatever question was asked.
Eddie asked about tractor loans. Not what he should/shouldn't do, or what you believe or even question why he needs/wants a tractor.

Cheez

If you had a tractor loan or used a personal loan or used a home equity line of credit to finance a tractor, it's appropriate to spell out your experience.
That's all you need to do.

I financed my tractor through Mahindra. Rates were competitive at the time of approximately 4%. This isn't like buying a house where you are financing hundreds of thousands so the percentage effects on loans in the 35-50 K range, are not as great. I did so because I liked the convenience and pricing of loans were not that differentiated.

Here is a company Eddie that may answer some questions for you LoansforTractors

 

[arrow]

I bought mine new, and financed it through the credit union. Rates varied with the length of the loan. I think the sweet spot was three or four years, although longer terms were available at higher rates. Beyond some term, maybe five or seven years, the rate would revert to whatever the then current rate was.

Used tractors that were two or three years old were possible to finance at the same rate as new, with higher rates for units older than that.

When I bought, rates were low enough that you would have been crazy to not finance the tractor, at least up to the point that the payments might affect your cash flow and lifestyle.

I kept the bulk of the money the tractor cost in the stock market, did a nominal down payment , something like $7000, and financed the rest. Frankly, I made out like a bandit, as the money left in the market had roughly 25% annual returns over the period of the 2.7% loan.

Like jstpssng's contribution, this is an example of a real answer to Eddies question.
Pure and simple explanation w/o questions, judgment or personal opinion on motive.

 

[Diggin It]

If you qualify, AgDirect is around 2.5 to 4% based on new/used, place of purchase, term length (up to 7 years) and amount financed.

AgDirect: Farm Equipment Financing

AgDirect® is powered by Farm Credit – committed to serving agriculture and built from the ground up to finance ag equipment.

www.agdirect.com

 

[rScotty]

I am always in amazement when a question is asked and people feel compelled to relate their own personal quirks and beliefs to whatever question was asked.
Eddie asked about tractor loans. Not what he should/shouldn't do, or what you believe or even question why he needs/wants a tractor.

Cheez

SNIP....

Well, arrow... it's called "conversation". Nearly a lost art, but still important to many rural folks.

Now if Eddie feels that we have drifted so far that he is about to lose sight of both his original question as well as any possible answers - and that surely does happen - then it would be up to Eddie to bring the conversation back around to his original goal. That happens, too.

And I think all of us would encourage him to jump right in and do that the moment he feels the need. No harm there. Otherwise we'll just happily babble along.
rScotty

 

[arrow]

Well, arrow... it's called "conversation". Nearly a lost art, but still important to many rural folks.

Now if Eddie feels that we have drifted so far that he is about to lose sight of both his original question as well as any possible answers - and that surely does happen - then it would be up to Eddie to bring the conversation back around to his original goal. That happens, too.

And I think all of us would encourage him to jump right in and do that the moment he feels the need. No harm there. Otherwise we'll just happily babble along.
rScotty

Well then, regard me as part of the "conversation" and I would agree with you had the op asked about a "decision" to buy a tractor or not and was kind of "stuck".
I hope your contribution would be applicable to those who peruse Eddie can't think for himself about what he does with his life.
He came here for "loan advice" and not "life lessons".

 

[sandman2234]

I borrowed from the credit union and used a savings account as collateral. 2% and they still paid interest on the savings account. That was several years ago when rates were higher. Tractor got paid off and payments went to pay house off early. Debt free is great!
David from jax

 

[rScotty]

Well then, regard me as part of the "conversation" and I would agree with you had the op asked about a "decision" to buy a tractor or not and was kind of "stuck".
I hope your contribution would be applicable to those who peruse Eddie can't think for himself about what he does with his life.
He came here for "loan advice" and not "life lessons".

Gotta agree that Eddie W. never seemed to me to be needing "life lessons". But those unasked for lessons do seem to come along with TBN conversations.

On the financing question, it's not something I know much about - I'm from the old "fix it or do without generation" - but it is with conversations like this that I'm learning more.
rScotty