Agribusiness can present many challenges to operators, especially having sufficient time and possibly easily accessible resources to assess the financing options when purchasing new machinery. We support operators in the agricultural sector with easily accessible resources to compare farming machinery finance options and services to secure loans at the best interest rates.
Acquiring new machinery is a major business investment and one that is expected to deliver improved efficiency and productivity, increases in output and yield, reduce operational costs and in many instances, make working the property easier. Selecting the most appropriate loan product can be critical to achieving those objectives.
Different asset financing facilities will suit different business setups and structures. There are options to suit operators with a small holding, family properties, large scale operations, SMEs, self-employed operators and trust structures. The decision as to which is most appropriate to the individual business will be determined by considering several factors which include the method of accounting which is used to prepare the accounts; the approach taken to the balance sheet; and the strategy regarding tax deductions.
Interest rates are of course integral to the overall cost of the financing and the outlay for the machinery. But the appropriate finance product is even more important to achieving the expected outcomes.
Farming Machinery Financing Options
Operators have a choice of four options when it comes to financing farming equipment. There are variations across these options relating to tax and accounting practices. Some products suit the cash method of accounting and others the accruals method. Referring to the accountant is advised to clarify which method is implemented by the business. The accounting method used by a business can only be changed at the start of a new financial year.
Farm machinery Leasing is suited to the accruals accounting method. This is an off-balance sheet financing product where the lender retains ownership of the machine during the lease term and leases the machine to the business. Full use of the machine is with the operator and the operator must meet all expenses related to operating and maintaining the machinery.
The tax deductible elements are straightforward in that the monthly repayments are treated as an expense by the ATO and are deductible. Repayments have GST applied and this is claimable on the relevant BAS. A residual can be selected, in line with ATO guidelines, and this can reduce monthly outgoings but is payable at the end of the term.
Machinery Rent-to-Own loans have features similar to Leasing but with some variations which result in the interest rate being higher than for Leasing.
Chattel Mortgage is a widely-used financing option for farming machinery as many businesses use the cash method of accounting which this option suits. Ownership of the machine is in the hands of the business from settlement. This results in the machine being posted to the business accounts as an asset which is then subject to depreciation.
The annual depreciable value is determined by ATO rulings at the time of purchase. This value is the annual tax deduction on the acquisition. The repayments are then not deductible, except for the interest component. The GST charged on the purchase price is claimable immediately, on the relevant next BAS.
A balloon component – a percentage of the loan payable at the end of the term, is an option. We can assist operators in structuring the finance with a balloon to deliver the preferred monthly repayment structure. Chattel Mortgage has a lower rate of interest than Leasing and Rent-to-Own.
An option that has features that are in line with both Chattel Mortgage and Leasing is Commercial Hire Purchase. This product can be used by businesses that implement either the cash or the accruals method of accounting. Widening the options for many operations.
When securing all farming equipment financing, we arrange fixed terms of up to 7 years, fixed interest rates and fixed repayment schedules. No deposit financing is available.
To cover additional features to compare farming machinery finance, including options like Macquarie equipment finance, refer to the individual web pages or contact us to discuss the options regarding the machinery you are purchasing.
Compare Farming Machinery Finance Interest Rates
The Equipment Loan interest rates on loan facilities do vary and there are variations in rates offered by different lenders. With access to specialist lenders, Jade Equipment Finance sources the best rates to enable operators to quickly compare farming machinery finance options.
Our quick reference table and calculator allow estimates to be easily calculated to compare finance options and different machines.
Compare Finance for Types of Machinery and Equipment
The selection of financing products can be used to purchase all types of machinery and equipment used in the agriculture and farming industry. That includes new and used, from all leading brands and manufacturers – harvesters, tractors, irrigators, dozers, dairy operations, tillage machines, tech systems and more from CASE IH, JD, New Holland, Massey Ferguson and more.
Our consultants handle the complete finance sourcing process through to settlement. Providing time-challenged agricultural operators with an efficient, straightforward and extremely smart way to acquire lower rate farming equipment finance.
To compare farming machinery finance quotes, contact Jade Equipment Finance on 1300 000 003
DISCLAIMER: IF MISINTERPRETATIONS, MISREPRESENTATION OR ERRORS EXIST IN THIS ARTICLE, NO LIABILITY IS ACCEPTED. THE INFORMATION IS PROVIDED ONLY FOR GENERAL PURPOSES AND NOT IN ANY MANNER INTENDED AS THE ONLY SOURCE FOR MAKING FINANCIAL DECISIONS. THOSE THAT CONSIDER THEY REQUIRE ADDITIONAL GUIDANCE OR ADVICE SHOULD REFER TO AN INDEPENDENT FINANCIAL ADVISOR.
