See national chem pricing trends in the FBN Research report
Many of the best deals on farm equipment don't happen at a dealership.
The private party market for farm equipment, such as tractors, combines, planters, semi-trailers, and other large machinery, can offer significant savings, especially when you can purchase a well-maintained piece of equipment directly from another farmer.
However, a private party transaction can also introduce unique challenges, including financing.
Unlike a dealership that has established lending partners, a private sale requires you to be the one to secure the capital. But this isn't a hurdle; it's an opportunity to structure a deal that works for your operation, leveraging your business acumen and strong financial history.
Here’s a step by step guide to financing a private party ag equipment purchase.
Farm equipment is highly specialized and designed to meet specific needs, so finding the right machinery can unlock your farm’s full potential by allowing it to perform more efficiently and become more automated.
Start the purchase process by identifying the machinery you’d like to purchase through local connections, online sale sites and forums, or the FBN Community For Sale section.
Once you’ve found your ideal machinery, draft a purchase agreement with the equipment owner. Simple purchase agreement templates are available online. Be sure to include all relevant details, including:
The price, terms, and conditions of the sale;
The seller’s name, address, and phone number;
The buyer's name, address and phone number;
A description of the equipment, including manufacturer, model year, model number, serial number, and engine hours if applicable.
The purchase agreement must be signed and dated by both the seller and buyer.
After outlining the purchase agreement, you have several avenues to secure financing, each with its own benefits. These options include:
Your Local Bank or Credit Union: If you have a long-standing relationship with a local bank, they could be a good lending option. However, they may have limitations on the age of equipment or specialty machinery, or they may not specialize in ag equipment, leading to a longer approval process.
FBN Finance Equipment Loan: Specializing in farm equipment financing for both dealership and private party sales, FBN Finance offers streamlined online applications, a deep understanding of equipment values, and faster approval times — which is crucial when you need to act quickly on a good deal.
Seller Financing: In some cases, the seller may be willing to finance the purchase themselves. This can be a flexible option, but it requires a formal, written agreement outlining the terms, interest rate, and repayment schedule. This is essentially a loan from the seller to you, and it should be treated with the same legal rigor as a bank loan.
Once you’ve selected a lender, your next step is to prepare your financial documents and submit your financing application.
For most equipment purchases of $250,000 or less, qualified borrowers usually only need to submit a basic financing application. For loan requests over $250,000, borrowers may be required to provide additional financial information. This could include:
2 years of tax returns
A balance sheet and income statement with debt schedules and projections
3-6 months of bank statements
The primary difference for a lender in a private party transaction is the lack of a dealership as an intermediary. The lender will need to directly assess the equipment's value and condition to protect their investment.
During this assessment process, the lender is primarily focused on the asset’s:
Current market value: A lender will require a recent appraisal or a third-party valuation to determine the equipment's fair market value. They won't simply take the seller's asking price at face value. Be prepared to provide detailed information, photos, and any service records.
Condition and age: Lenders are more comfortable financing newer, well-maintained equipment. For older equipment, they may require a higher down payment or offer a shorter loan term to mitigate the risk of mechanical failure.
Title legitimacy: This is the most critical step and can also add additional time to the financing process. A lender will require a clear title, free of any existing liens. If the seller has an outstanding loan on the equipment, the loan from your lender will pay off that lien directly, and the new title will be issued to you, with your lender as the lienholder. The lender will perform a UCC (Uniform Commercial Code) lien search to ensure there are no existing claims on the equipment. This protects both you and the lender. This is a standard and secure process.
The lender will also review the purchase agreement at this time.
Once approved, the lender will send the funds directly to the seller (or to the lienholder if there is a payoff). The seller will then provide you with the equipment and the title or bill of sale.
Financing a private party equipment transaction requires foresight and preparation, but the potential savings make it a highly valuable strategy. By approaching it with the same business rigor you apply to your crop marketing or land management, you can secure the right equipment on your terms, keeping your operation running efficiently and profitably.
We’re here to help your operation grow with flexible financing solutions on ag-related products, including equipment loans. Farm equipment loans can help you buy the equipment you need to improve efficiency in your operation — without putting a strain on current budget or cash flow.
A trusted provider of agricultural financing solutions, FBN Finance has a team of experts with years of experience in the industry, and we understand the unique needs of farmers. Connect with an FBN Finance loan advisor today to get a customized quote for your operation.
Copyright © 2014 - 2025 Farmer's Business Network, Inc. All rights Reserved. The sprout logo, and “FBN” are trademarks, registered trademarks or service marks of Farmer's Business Network, Inc.
The material provided is for information purposes only. It is not intended to be a substitute for specific legal or professional advice. Neither Farmer’s Business Network nor any of its affiliates makes any representations or warranties, express or implied, as to the accuracy or completeness of the statements or any information contained in the material and any liability therefore is expressly disclaimed.
Financing offered by FBN Finance, LLC and its lending partners. Available where FBN Finance, LLC is licensed. Terms and conditions apply. To qualify, a borrower must be a member of Farmer’s Business Network, Inc. and meet all underwriting requirements. Interest rates and fees will vary depending on your individual situation. Not all applicants will qualify. NMLS ID: 1631119