The short version
- Tractor finance is business asset finance for farm machinery. It is usually a chattel mortgage: the farm business owns the tractor from day one, and the lender holds a PPSR security interest until the loan is paid off.
- Deals run from about $50K for a compact utility tractor to $1.5M for a high-horsepower articulated four-wheel-drive.
- The rate, term, deposit and lender all change with the tractor's age and your business profile. The right answer moves around more than most template articles admit.
- Most clean deals settle in three to seven business days. Seasonal repayments, balloons timed to harvest and skip-payment deals are available from specialist agricultural lenders. General commercial asset-finance lenders usually don't offer them.
Most online guides treat tractor finance as one product, with the same rate range and the same advice for a $90K Kubota and a $900K Case Steiger. In practice those are different deals. A hobby farmer's utility tractor and a broadacre cropping operation's articulated 4WD are set up differently, and they're mostly written by different lenders. This article covers what tractor finance is in Australia, how a deal works, what it costs, and the part most guides skip: how lenders change their terms as the tractor gets older or the deal gets bigger.
What is tractor finance?
Tractor finance is asset finance for farm tractors. The tractor is the security, and the lender pays the supplier directly at settlement.
It's part of the wider asset finance category, which covers vehicles, plant and equipment. The same structures are available: chattel mortgage, hire purchase, finance lease and operating lease. In farming, the chattel mortgage is by far the most common. The other three come up now and then when a specific tax or accounting reason suits them better. For most farm tractor purchases, the real question is which lender gives the best rate, not which structure to use.
"Tractor" here covers a wide spread. At the small end are utility tractors (Kubota M-series, John Deere 5R, Massey Ferguson 5700, New Holland T5). In the middle are broadacre and contracting tractors (Fendt 700-series, Case IH Puma, John Deere 7R, Valtra T-series). At the top are high-horsepower row-crop and articulated four-wheel-drives (Fendt 1000-series, Case IH Magnum and Steiger, John Deere 8R and 9R series, Challenger MT800). There are also specialty tractors for orchards and vineyards. Headers, balers, spreaders and other implements are usually financed separately, often on a multi-asset facility, because lenders value them differently and have different appetite for them.
This article is for established farmers in cropping, grazing and mixed operations, contracting and ag-services businesses, agribusinesses growing their fleet, and buyers getting a tractor for rural land use inside an ABN-registered business.
How tractor finance works
Most Australian tractor finance deals follow the same steps.
You or your broker send an application to one or more lenders. The lender checks you can afford the repayments (serviceability), looks at the tractor, and looks at any other security. Once it's approved, the lender pays the dealer or seller directly at settlement. You take delivery and start monthly repayments. The lender's security is registered on the Personal Property Securities Register (PPSR) until the loan is paid off.
There are three ways to document a deal. Full-doc needs two years of tax returns, two years of financial statements and a recent BAS, the same pack a bank wants for a commercial loan. Low-doc accepts six to twelve months of BAS, or an accountant's declaration, instead of full financials. Established operators use it so they don't have to put together a full credit pack for every purchase. For newer businesses, time trading on the ABN matters more: most lenders want at least two years of trading before they offer low-doc terms.
Chattel mortgage is the most common choice on farms for the same reasons it leads business asset finance in general. You own the tractor from day one. You claim the GST on the purchase price upfront on your next BAS, instead of spreading it across a lease. Depreciation goes on your tax return under Division 40 of the income tax legislation. The interest in each repayment is deductible. The lender registers a security interest on the PPSR but doesn't own the tractor.
Hire purchase still turns up now and then. It works much the same, except the lender keeps legal title until the last payment. Operating leases are rare here. A tractor lasts a long time and loses value, and you'll almost certainly want to keep it, so the leftover value risk doesn't suit the lender. Finance leases appear in bigger fleet deals, where paying GST bit by bit suits the borrower's cashflow better than paying it upfront.
A clean tractor deal usually settles three to seven business days after the application is signed. Used or imported equipment can add another week if the dealer paperwork or an inspection is slow. Bigger deals of $500K and up usually take five to ten business days, because the lender wants more security and more proof you can repay.
Seasonal repayments and cashflow
Farm income doesn't arrive monthly. Cropping operations get paid in a short window after harvest. Livestock operations get paid around sales. Contractors earn through spraying and harvest and slow down in winter. Your tractor repayments should fit that pattern.
Specialist agricultural lenders offer skip-payment deals (no repayments in two or three months you choose), interest-only periods through the quiet months, balloon payments timed to a big sale, and yearly or half-yearly repayments that line up with harvest income. General commercial asset-finance lenders usually stick to monthly repayments. Choosing a lender that can do seasonal repayments is often a bigger decision than the structure itself.
A worked example
A mixed-cropping operation in central NSW buys a new Case IH Puma 220 for around $380,000. It's a chattel mortgage over five years at an indicative 7.95% p.a., with a 30% balloon at the end. There's no deposit: the operation has two years of clean tax returns, repays comfortably on full-doc, and the tractor is new. It owns the tractor from day one and claims the full GST of about $34,500 on its next BAS. Settlement takes six business days. Repayments are monthly. The operation has enough off-farm income to smooth its cashflow, so it didn't need seasonal repayments on this deal, though they were an option.
A larger broadacre operation buying a $760K Fendt 1050 at the top of the market would look different. Expect a deposit of 10 to 20% even on a new tractor. The lender would likely add security, such as a registered second over implements or a general security over the business, and would check repayment ability more closely because of the size. The rate only goes up a little, because lenders price the asset risk, not the deal size. The setup work is much bigger.
What tractor finance costs
The rate is the lender's own cost of money plus a margin for the tractor and your profile. The bands below cover most of the market in May 2026.
- Established farm, full-doc, near-new tractor (new or up to about three years old), strong ability to repay: 7.0 to 8.5% p.a. Major banks, second-tier banks, the manufacturer finance arms (John Deere Financial, Case CNH Capital, Fendt Finance) and specialist agricultural lenders all compete here.
- Established farm, low-doc, or a tractor five to ten years old: 8.5 to 11% p.a. Specialist asset-finance lenders take over from the banks here. Where you land depends on the details: a clean five-year-old Fendt 728 prices much better than an old Case Magnum with high hours.
- Newer ABN, older tractor (over ten years), low-doc with weaker repayment ability: 11 to 14% p.a. This is specialist ag-finance lenders and the wider asset-finance market. Some lenders stop at fifteen years of tractor age. Others lend on mechanical condition, with a recent inspection report.
Deposits follow the same pattern. No deposit is common for established farms buying new. Ten to thirty percent applies on used tractors over five years old. Over ten years old, the deposit is usually decided deal by deal and depends on the inspection. The top tier (Fendt 1000-series, Case Magnum and Steiger, John Deere 9R and articulated 4WDs at $500K and up) usually needs a 10 to 20% deposit even when new, because lenders look harder at their security on one asset that big.
Terms run one to seven years, and five is typical for tractors. Balloons of 20 to 40% are standard, lower on heavy plant that loses value faster. You can time the balloon to a big sale: a balloon due in November after harvest works very differently from one due in July.
Tax under a chattel mortgage is simple. You claim the full GST on the purchase price on your first BAS after settlement. Depreciation runs under Division 40 at the effective life rate in the ATO's depreciation tables. The interest in each repayment is deductible. The instant asset write-off may apply to smaller assets, depending on the year and your turnover. The threshold changes with each federal budget, so check it with your accountant before you count on it.
Aurelius Capital works with the major banks, second-tier banks, the manufacturer finance arms, and specialist asset-finance and agricultural lenders. Our job as broker is to match the tractor and your profile with a lender that wants the deal. Which lender gives the best rate changes month to month. Our asset finance service covers commercial asset purchases in general, and tractors are one of the most common.
New, used and old tractors: where lenders change
This is the gap in most online tractor finance content. The rate ranges and deposit advice usually assume one kind of tractor. In practice the market splits at three points: brand new versus lightly used, lightly used versus five to ten years old, and over ten years old, where most lenders start dropping out.
New tractors and current model year
The most lenders, the lowest rate and the lowest deposit. Banks compete with second-tier banks and specialists. The manufacturer finance arms (John Deere Financial, Case CNH Capital, Fendt Finance, AGCO Finance for Massey Ferguson and Valtra, Kubota Australia Finance) often write the deal directly at sharp rates, because they're also looking after the manufacturer's sales. For established farms on full-doc, this is the easiest tier: no deposit, prime rates and fast settlement.
Used, one to five years old
Lenders are still keen. Major banks get a little stricter and specialists pick up the slack. The brand matters more than on a new tractor. The major brands hold their value well enough that most lenders are comfortable. Lesser-known brands mean fewer lenders and may need a deposit. The rate is only a little higher than for new.
Used, five to ten years old
Things change here. Most banks pull back and specialist asset-finance lenders take over. Hours matter: a five-year-old Case Magnum with 3,500 hours is a different deal from one with 8,000 hours, and lenders price it that way. A deposit of 10 to 20% becomes common. Terms get shorter. A five-year loan on a ten-year-old tractor does happen, but it isn't the norm.
Older tractors, ten years and over
Only specialist asset-finance lenders do these. A handful lend up to fifteen years of tractor age, and a smaller group will lend on older equipment if the inspection report backs it up. Rates sit at 11 to 14%. The deposit is usually 20 to 30%. Terms are usually three years, sometimes five.
Bigger deals
Deal size matters as much as age. At the Fendt 1000-series, Case Magnum and Steiger, John Deere 8R and 9R, and articulated 4WD level, roughly $500K to $1.5M-plus, fewer lenders are interested. Specialist agricultural lenders do most of these. General commercial asset-finance lenders don't have the resale-value models or the appetite for a single $1M asset. The deal changes too. A deposit is usually needed even on new equipment. Lenders often want extra security on top of the PPSR over the tractor, such as a registered second over implements or a general security over the business. They also want more proof you can repay. Even established operators on full-doc land near the top of the prime rate range, because the lender has a lot riding on one asset.
Most online tractor finance content stops before this tier or skips it. It's also where a broker helps most. Picking the lender for a $760K Fendt 1050 is much harder than for a $90K compact utility tractor, and the gap between the right lender and the next best is often 50 to 100 bps of rate, or 10% of deposit.
If you're pricing up a tractor, compact to articulated, new or used, and want a broker's view on which lenders will want it, how to set it up and what it's likely to cost, the application form is below. Most enquiries get a reply within four business hours.