Quick answer
Most Australian farmers finance machinery with a chattel mortgage, hire purchase or lease secured over the machine itself. The structure that matters most is the repayment pattern: monthly instalments suit steady income, while seasonal, quarterly or annual repayments and a balloon suit crop and wool cheques. Compare total dollars paid, the balloon, and how the deal sits against your bank's existing security.
Key points
- Match the repayment rhythm to when the farm actually earns, not to a default monthly schedule
- The machine is usually the security, so land equity often stays untouched and your bank relationship stays simple
- Buying at auction or privately? Run a PPSR search on the serial number before you bid
- Check any existing general security agreement held by your bank before signing a second financier's documents
- Compare the total repaid in dollars including the balloon, not the monthly figure alone
A header sits in the shed for eleven months of the year and earns its keep in about four weeks. That one fact explains why financing farm machinery isn’t quite the same as financing a delivery van, and why the cheapest-looking monthly figure is often the wrong deal for a cropping or grazing business.
This guide walks through how Australian farmers usually fund tractors, headers, balers, sprayers and seeders, how to line the repayments up with your cash, and the checks that save money before you sign.
What are the main ways to finance farm machinery?
Almost all machinery finance in Australia is asset-backed: the machine itself is the security. That keeps the borrowing separate from your land, which is the main reason many farmers prefer it to stretching a farm loan.
| Option | Who owns the machine | Typical fit |
|---|---|---|
| Chattel mortgage | You, from day one, with the financier holding a mortgage over it | Long-lived gear you intend to keep |
| Hire purchase | The financier until the final payment | Straightforward purchases; some prefer the structure for tax reasons |
| Finance lease | The financier, with an agreed residual at the end | Gear you may upgrade, or want to hand back |
| Dealer or manufacturer finance | Depends on the product | Convenient, sometimes with promotional structures at the point of sale |
| Farm loan or line of credit from your bank | You | Smaller purchases when your bank is comfortable with existing security |
If your bank offers to fund the machine on its normal farm facility, take that seriously. Banks are often the cheapest source of money, they already know your farm, and one lender is simpler than three. The options above matter when the bank’s limits are full, the process is too slow for a sale date, or the bank has said no.
The broader comparison is in how equipment finance works and the head-to-head on chattel mortgage and hire purchase.
How should repayments line up with the seasons?
This is where farm finance earns its keep. A monthly schedule assumes income arrives monthly. Yours might arrive as a harvest delivery in December, a wool sale in spring, a lamb draft in autumn, or a milk cheque that really is monthly.
Ask financiers about three structures:
- Seasonal or irregular repayments. Payments set at quarterly, half-yearly or annual intervals to fall just after income lands. Some financiers also accept a skip-month pattern.
- A balloon or residual. A smaller regular payment with a lump sum at the end. The total cost is higher, so only use it when you’re confident about refinancing or selling the machine. The balloon payment entry explains the risk.
- Step-up payments. Lower payments in the first year while a new paddock or contract gets going.
None of these are automatic, and not every financier offers them. The ones used to rural clients, including manufacturer finance arms such as John Deere Financial and CNH Industrial Capital, tend to be comfortable with irregular income. For the wider planning view, see how farmers manage seasonal finance.
One caution: annual repayments concentrate risk. If a drought or a frost wipes out the harvest, a large annual payment lands on the worst year. Some farmers choose a monthly schedule with a modest amount and keep a cash reserve instead.
What do financiers look at for farm machinery?
For established farms, lenders usually weigh:
- how long you’ve been farming and the business structure (individual, partnership, company or trust)
- two to three years of tax returns, and recent bank statements
- existing debt, particularly any bank facilities with security over plant
- the machine: age, make, hours, and how readily it resells
- your deposit or trade-in
Tractors and headers from major brands tend to hold value, and financiers know the resale market. Specialised or older equipment gets a closer look, and the amount financed may be lower. Our equipment finance calculator helps you test a few price, deposit and balloon combinations before you talk to anyone.
What should you check before buying second-hand gear?
Used machinery is a big part of farm buying, and private sales and auctions carry a risk new purchases don’t: the machine might already be someone else’s security.
Search the PPSR, the national register of security interests in personal property, using the machine’s serial number (and the seller’s name or ABN). If a financier has registered an interest and the seller hasn’t paid it out, that interest can follow the machine to you. The PPSR certificate costs very little compared with the risk.
Also check:
- that the serial number on the machine matches the paperwork
- whether the sale is “as is”, and what the auctioneer’s terms say about settlement time
- whether your financier’s valuation or age limit will accept the machine
A pre-approved limit before auction day lets you bid knowing the finance side is done. Our guide to finance for used equipment goes further.
How does tax affect the decision?
This is for your accountant, but the rules shape the choice so it’s worth knowing the outline.
- Under the ATO’s instant asset write-off for small business, eligible assets costing under $20,000 first used or installed ready for use between 1 July 2025 and 30 June 2026 can be fully deducted in that year. Check the ATO page for what applies to assets you start using from 1 July 2026, as that measure’s legal status has been updated more than once. Most tractors and headers cost far more than the threshold, so they’d normally go through ordinary depreciation or the small business pool.
- Primary producers also get specific treatment for items such as fencing, fodder storage and water facilities, which follow special rules rather than the general ones. Machinery doesn’t.
- Whether a chattel mortgage or lease suits your structure, and when GST credits are claimed, depends on whether you’re registered for GST and how you report. Ask before you sign, not after.
Our guide to the instant asset write-off and equipment finance covers the mechanics.
Have a machine in mind and a repayment pattern you can’t get from your bank? Tell us about it here and a person will talk through what could work.
A worked example: a mixed farm replacing a seeder
This is an illustration, not a real client. A 1,800-hectare mixed cropping and sheep operation in the Wheatbelt needs a new air seeder before sowing. The dealer quotes $240k.
The farm has two sources of cash: the grain pool payment in December and a lamb sale in autumn. Monthly payments would strain the middle of the year, so the owners ask three financiers for quotes on a five-year term:
- Monthly, no balloon. Simple, but eats cash in July and August when fuel and chemical bills peak.
- Two payments a year, no balloon. Lines up with December and April, and the total interest bill is only a little different from monthly because the balance falls in big steps.
- Annual, with a $60k balloon. Lowest annual payment, highest total cost, and a lump to refinance in year five.
They pick the twice-yearly pattern, take the finance through the dealer’s financier because it offered the flexible schedule, and ask the bank to confirm in writing that the new security over the seeder doesn’t breach its facility terms. The one surprise is the bank’s general security agreement, which already covers all farm plant. The financier asks for a priority arrangement with the bank. It takes ten days, which is why they began a month before sowing.
The takeaway: the right structure came from the farm’s income calendar, and the slowest step was the bank paperwork, not the credit decision.
What mistakes cost farmers the most?
- Choosing by the monthly figure. Compare total paid, balloon and fees in dollars.
- Ignoring the bank’s existing security. A bank holding all-asset security may need to consent to a second financier, which adds time.
- Leaving the finance until the day of the sale. Pre-approval is quick; settlement at an auction is not.
- Over-sizing the balloon. A big residual that the machine may not be worth at the end becomes a debt you carry.
- Skipping insurance. Financiers require cover noting their interest; arrange it before delivery.
Next step: check what your numbers could support
Farm machinery decisions usually carry a date: sowing, harvest or a sale that won’t wait. That’s why the enquiry form is short. It takes about a minute to complete and asking won’t touch your credit file, so there’s no cost to finding out. We don’t pass your details around to a long list of financiers; a person reads your enquiry, and calls to ask about the machine, the season and the repayment pattern you need.
The more accurate you are about the price, the age of the machine and your existing finance, the sooner we can point you at the right structure the first time.
Frequently asked questions
Can I get farm machinery finance if my income is seasonal?
Yes. Many equipment financiers will set repayments quarterly, half-yearly or annually, or build in a lower early payment and a larger balloon at the end. They will want to see how your income arrives across the year, usually from a few years of tax returns and recent bank statements, so be ready to explain the pattern.
Do I need a deposit to finance a tractor or header?
Not always. Established farms buying new or near-new gear from a dealer can often finance all or most of the price, while older machines, private sales and weaker credit histories tend to need a deposit. Trading in an existing machine can serve as the deposit.
Can I finance a second-hand tractor bought at auction?
Many lenders will, provided the machine is of an age they accept and has a clear title on the PPSR. Because auction timing is tight, get a pre-approval or an indicative limit before the sale rather than after you win the lot.
Is a chattel mortgage or a lease better for a farm?
A chattel mortgage means you own the machine from day one, which suits gear you plan to run for many years. A lease can suit equipment that changes quickly or that you want to swap, but you generally don't own it unless you pay the residual. Your accountant should compare the tax treatment of each for your structure.
Will finance affect my farm loan with the bank?
It can. Equipment finance is an extra commitment that your bank will see when it reviews your overall position, and some farm loans restrict further security over plant. Tell your bank manager early, and ask whether it can fund the machine itself on terms you prefer.