Australian farmers typically fund tractors and harvesters through chattel mortgages, commercial hire purchase or finance leases, with rates ranging from 6.5 to 15 per cent and terms from one to seven years. A broker can match you with 100 plus lenders to secure approval while preserving working capital for seasonal needs.
For local buyers, agricultural machinery finance Securing finance for farm machinery requires understanding ownership and tax options.
Agricultural Machinery Finance Explained
When financing farm equipment, the structure you choose determines who owns the asset and how you handle tax. A chattel mortgage allows your business to own the tractor from day one. The lender holds a security interest until the loan is repaid. GST registered businesses can claim the input tax credit on the purchase price upfront and depreciate the asset over its effective life. A commercial hire purchase works differently. The lender buys the equipment and hires it to your farm over a set term. Ownership transfers only after the final payment. GST is usually claimed across the life of the agreement. A finance lease sees the lender retain ownership during the term. At the end, you can buy, extend or return the machinery. Each structure can include a balloon payment to lower regular repayments. The right fit depends on your accountant's advice and the way your operation treats equipment on the balance sheet. For a detailed breakdown of these options, see the agricultural machinery guide.
What Lenders Assess
Lenders evaluate applications based on the farm profile, trading history and the type of machinery. Established farms with strong financials often access lower rates. Newer operators may still qualify but typically face higher interest. The value and resale potential of the equipment also play a role. A broker who understands agricultural asset values can navigate these criteria to find a suitable lender. When assessing an application, lenders weigh the trading history of the farm, the type and resale value of the machinery, and the proposed deposit. Newer operators can still secure finance, though they tend to sit at the higher end of the rate range.
Typical Rates and Terms
Indicative rates vary by farm age. Established farms with two or more years of strong financials often see rates between 6.5 and 9 per cent. Standard operations trading for one to two years usually fall between 9 and 12 per cent. Newer or specialist operators can see rates from 12 to 15 per cent and above. These figures are indicative only and current as of 2026. The actual rate depends on individual circumstances, lender assessment and market conditions. Loan terms generally run from one to seven years, aligned with the expected working life of the machinery. Larger new tractors and harvesters often carry longer terms, while used utility machinery sits at the shorter end.
Why Use a Broker
Using a broker can streamline the process. Loan Phone connects farmers with asset and equipment finance experts who assess suitable lender options. This approach often delivers fast initial approvals. A broker saves time by comparing offers from many lenders rather than approaching them individually. This is particularly useful for seasonal businesses where cash flow is critical. Comparison platforms streamline the process by connecting farmers with many lenders at once, which often delivers fast initial approvals. A broker who understands agricultural asset values and lender appetites connects you with suitable finance providers. Once approved, the broker coordinates with the supplier so delivery and settlement of the machinery run smoothly.
- Assess your needs. Set out the equipment type, cost, whether it is new or used, and how the farm will use it.
- Get matched with specialists. A broker who understands agricultural asset values and lender appetites connects you with suitable finance providers.
- Compare the structures. Review chattel mortgage, commercial hire purchase and finance lease, weighing ownership, tax and cash flow.
- Settle and take delivery. Once approved, the broker coordinates with the supplier so delivery and settlement of the machinery run smoothly.
| Structure | Who owns the machinery | Best suited to |
|---|---|---|
| Chattel mortgage | Your farm, from day one | Owning the asset and claiming GST upfront |
| Commercial hire purchase | You, after the final payment | Spreading GST over the term with eventual ownership |
| Finance lease | The lender, during the term | Lower upfront costs and flexible end options |
Common questions
Can I get finance if I am a new farmer? Yes, newer operators can still secure finance, though they tend to sit at the higher end of the rate range. Lenders will assess your trading history and the machinery's value.
What is a chattel mortgage? A chattel mortgage is a loan where the business owns the asset from day one. The lender holds a mortgage over the equipment until the loan is repaid. GST registered businesses can claim the input tax credit on the purchase price upfront.
How do interest-only loans work for farm equipment? An interest-only loan allows you to pay only the interest for a set period. This can help manage cash flow during busy seasons, though the principal remains outstanding until the term ends.
This guide provides an overview of agricultural machinery options in Australia. It is an independent resource and does not constitute financial advice.