Cash-Out Refinance Farm Equipment
A cash-out refinance on farm equipment pays off your existing loan and delivers the difference as working capital. Great for inputs, land, or repairs. Learn.
Equity sits quiet inside paid-down equipment until you do something to move it. A cash-out refinance on farm machinery works the same way as one on real estate: we pay off whatever you owe, and if the machine is worth more than the payoff, the difference comes to you as cash. Farmers use that cash for spring inputs, a down payment on adjacent ground, a shop repair that cannot wait, or to carry operating costs through a short crop year. The iron keeps working, and the equity starts working too.
The distinction from a standard refinance on farm equipment is the purpose and structure. A regular refinance replaces one note with another at better terms. A cash-out refinance replaces the note and also advances the spread between what you owe and the equipment's appraised value, packaging it all into a single new loan. You come away with a loan balance higher than your old payoff, but you also come away with cash on hand.
How the Cash-Out Works in Practice
The starting point is establishing the current market value of the equipment. We look at the make, model, year, and condition, and compare against recent sales data for comparable machines. That determines the advance amount, which is typically expressed as a percentage of appraised value. On well-maintained machines with reasonable hours, lenders often advance from 80 to 100 percent of value, sometimes higher on strong credits.
From that advance we subtract the existing payoff. What remains is your cash-out. If a combine is worth $350,000 and you owe $180,000 on it, the lender might advance $320,000, pay off the old note, and put $140,000 in your account. You now have a new $320,000 loan on the combine and working capital available for whatever the operation needs.
Monthly payments on the new note depend on the loan amount, term, and rate. Because the new balance is higher than the old payoff, the monthly obligation may go up even if the rate improves. That is a trade-off to weigh against how urgently you need the cash and what you plan to do with it.
Refinance Programs
Farm Application-Only Financing
Finance farm equipment up to $400,000 with just an application and recent bank activity. No Schedule F package, no CPA statements, no long.
Bad-Credit (B/C) Farm Equipment Financing
Equipment financing for farmers with challenged credit. We work with B and C credit situations, low scores, prior bankruptcies, and short.
Equipment Leasing
Farm equipment leasing keeps payments lower and lets you upgrade at end of term. We work with tractors, combines, sprayers, and more.
What Equipment Supports a Cash-Out
High-value self-propelled machinery creates the best cash-out opportunities. High-horsepower tractors in the 250 to 400-plus horsepower range, late-model grain combines, and self-propelled sprayers often carry meaningful equity after a few years of ownership, particularly when commodity prices kept producers current on their notes. The equity builds faster than on lower-value implements because the dollar spread between what is owed and what the machine is worth can reach six figures on a single unit.
Used equipment qualifies as long as the title is clean and market value can be established. Machines purchased at auction or through a private party are common in our volume. A quick equipment lookup against wholesale and retail auction data gives us the number we need. Used farm equipment cash-outs are straightforward when the machine has known history and reasonable operating hours.
Large implements like Planters and tillage equipment can qualify but typically require the individual unit value to reach the minimum threshold or be packaged with other machines to get there.
Farm Refinance Questions
A low payoff is actually ideal for a cash-out refinance because the equity is larger. If you owe very little on a machine worth several hundred thousand dollars, the cash-out amount can be substantial. That is exactly the situation the product is built for.
The ceiling is set by the lender's advance rate against appraised value. Most lenders advance 80 to 100 percent or more of value on strong collateral and creditworthy borrowers. The cash-out is whatever that advance amount exceeds your payoff.
In a cash-out refinance you remain the titled owner throughout, and the new note is a loan. In a sale-leaseback you temporarily transfer ownership to the lender and lease the machine back. The tax treatment, balance sheet impact, and end-of-term options differ between the two.
Possibly, because you are borrowing more. The rate and term affect it too. Some producers are comfortable with a slightly higher payment if the cash-out funds something that earns more than the additional interest cost.
There is no restriction on use of proceeds from an equipment loan. Producers use the cash for inputs, land purchases, shop equipment, family living expenses during a short crop year, or to retire other debt. You are borrowing against your own equity.
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