Equipment financing is a crucial aspect of managing the finances of a farming operation, enabling our customers to acquire the necessary machinery to maintain and expand their businesses. At Farm Credit Mid-America, we know that understanding your financing options and current trends in the equipment industry will help our customer-owners make strategic equipment decisions in 2025 and beyond. Whether buying from a dealer, bidding at an auction, or purchasing from a private party, we have flexibility to provide farmers with the financing options that fit the needs of their operations.
Understanding Equipment Financing
Equipment financing involves obtaining funds to purchase or lease agricultural machinery. This can include tractors, combines, planters and other essential equipment for running a successful operation. Financing options are designed to help farmers manage their cash flow, preserve working capital and ensure they have access to the latest technology to enhance productivity.
Market Trends in the Farm Equipment Industry
Following the COVID-19 pandemic, there was a shortage of equipment, which manufacturers addressed by ramping up production in late 2023. This influx of new equipment led to an increase in used inventory in early 2024, resulting in numerous dealer inventory auctions. Currently, inventory levels are more manageable, although some dealers still have excess high-horsepower machinery.
Looking for Used Farm Equipment?
As of April 2025, it is important to act quickly when considering equipment purchases. Because of current inventory levels, farmers need to make some decisions within the next 6 to 9 months to secure the best selection of used equipment. Waiting too long could result in having to settle for older machinery or less desirable options.
Farm Equipment Leasing Options
Leasing is a popular alternative to purchasing new equipment outright. There are two main types of leases currently available:
Walkaway Lease (Fixed Purchase Option): This type of lease allows farmers to use equipment for a specified period and number of hours, without incurring excess charges. At the end of the lease term, they can return the equipment to a dealer. However, due to fluctuating residual values, walkaway leases are becoming less common.
Lease to Own: This option has increased in popularity. This type of lease offers lower payments compared to traditional loans and provides farmers with the option to purchase equipment at the end of their lease term. Farmers can trade in the equipment, refinance the residual, or keep it through refinancing.
Impact of Commodity Prices
Commodity prices play a significant role in equipment turnover. Higher prices can lead to more frequent equipment trades, while lower prices may extend the turnover period. Larger producers might shift from trading equipment every couple of years to every three years, potentially slowing down the inventory of used equipment.
Equipment financing is a vital component of modern farming, providing our customers and farmers across the United States with the means to acquire essential machinery. By understanding market trends, acting promptly and exploring leasing options, farmers can navigate the complexities of equipment financing and make informed decisions to support their operations.
Looking to learn more about the different equipment financing options that Farm Credit Mid-America offers? Connect with our team today and apply for a loan to get started.
Loans subject to credit approval. Additional terms and conditions may apply. Farm Credit Mid-America is an equal opportunity lender.
