Financing Used Farm Machinery: Loan, Lease or Cash?

An investment decision on farm machinery is always also a financing decision. Choosing the right approach can save more than the best negotiating skills.

Option 1: Cash Purchase

Advantages:

• Lowest total cost (no interest)
• Immediate free ownership
• Flexible resale possible

Recommended for: Machines under €20,000 when liquidity is available.

Option 2: Bank Loan

Advantages:

• Interest tax-deductible
• Asset can be depreciated
• Liquidity preserved

Typical terms: 4–8% interest, 3–7 year term, 10–30% down payment.

Important: For insolvency purchases: get financing commitment BEFORE buying.

Option 3: Equipment Leasing

Advantages:

• Monthly payments fully tax-deductible (operating expense)
• Low monthly payments
• Option to buy, return or extend at end of term

Disadvantages:

• No ownership during lease term
• Higher total cost than cash
• Leasing companies prefer newer machines (max. 5–8 years old)

John Deere 6920S | Year: 2007 | Hours: 6200 h | Power: 175 PS
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John Deere 5100R | Year: 2015 | Hours: 3800 h | Power: 100 PS
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Subsidy Programs

• Rentenbank (Germany): Agricultural investment loans up to €5M at preferential rates
• State programs: Each German state has its own agricultural investment aids
• EU EAFRD: EAFRD funds for farm investments up to certain sizes

Comparison Calculation

| Financing | Machine €50,000 | Total cost 7 years | |-----------|-----------------|--------------------| | Cash | €50,000 | €50,000 | | Bank loan 6% | €50,000 + interest | ~€63,000 | | Leasing | Monthly payments | ~€68,000 |

FAQ

Can I finance an insolvency machine? Yes — but the bank must agree before purchase. Credit and machine valuation required.

Is leasing worthwhile for older machines? Only limitedly. Most leasing companies finance machines maximum 8–10 years old.

Listings for all budgets: View Catalogue