Equipment Loans

What one has to realize is that the US farm program provides about a break even on corn, soybean, and other program crops. Which makes bankers a worry less about loaning money. Remember this phase,"farming the FSA". The second piece of advice is to learn all you can about federal multiparel crop insurance. What most don't realize is that there is a price support system built into certain parts of that program. They say the devil is in the details, but when it comes to the farm program, "the PROFIT is in the details".

As far as the question on interest rates. I believe the interest on one loan I have is 7%. That loan is for 4 years. Reasonable bankers look at the loan amout and your acerage, and set the number of years accordingly. Previously enjoyed machinery would likely be 5 years or less.

I worked 8-10 hours after school every day on the farm, saved all I could. Everything I made, I invested in cows. Equipment I rented or leased except a trailer. When I finally had a little money put back I bought land. I had 60K saved up when I got my first farm back in 1987. I was in college. Only loan I could get was a demand note. Got 250K to buy the farm. I made the choice to live with my parents and rent the farm house out to generate cash flow.

I didnt start buying equipment until up in the 90's, and then I bought junk and paid principle on the loan on the land. My first tractor was a 560 long, and a POS. My first hay rake I bought in the scrap iron pile. It wasnt until 1999, 4 years after the farm was paid off that I started getting decent equipment. I was was 30 before I got married and well into my 30s before I had kids.

To get up on the roof, it makes no sense to go down the basement stairs.

Gotta crawl before ya walk, walk before ya run.

Allan

Just my view,

Allan

Here's an even better idea - don't get loans. If you're serious about wanting to farm, don't get married, don't have kids, don't buy a fancy truck, don't buy a bass boat, don't buy an arsenal of guns, don't drink up or smoke up your money. If possible, live at your parents' home as long as you can. Work off the farm in a cash paying job and save every penny you can.

There's a financial guy on the radio in Nashville who says, "Live today like nobody else, so that tomorrow you can live like nobody else." Stay out of debt. When you have the money, then start farming. Pay as you go and sleep well at night. You might have to rent a farm when you finally have enough money to start farming, but eventually you'll be able to buy land too.

At least that's my opinion.

Tom in TN

The sooner you establish a good relationship with a Good banker, the better your terms will be. All bankers also want all of your business, we want your loans, your checking account, and your savings account.

Current terms are going to vary from 6.5% to 12%-14% depending upon your credit, your job, all the usual stuff. The length of the loan depends upon what the equipment is, how old etc.. the up side is that many ag loans are set up on an annual or biannual basis.

Don't even think about going to one of the big chain banks, the big banks care very little for the small "starter" loans. Look for a local bank that has a stake in your communitty, they have an interest in whether or not you succeed.

Rob