What are the main ways to get equipment?
You can buy with cash, borrow to buy, lease, rent, hire custom work or share with others. Each affects your cash flow, your risk and your long-term cost differently.
Start by asking how many hours a year you will really use the machine. Many small farms use equipment far less than they expect. A simple log of hours for a season will show whether your guess was close.
Buying makes the most sense when use is frequent and the machine will last. Renting or hiring is often cheaper for occasional jobs.
- Cash purchase
- Equipment loan
- Lease
- Rental or custom hire
- Shared ownership with neighbors
How do equipment loans work?
An equipment loan typically uses the machine as collateral and is repaid over a set number of years. Terms usually run no longer than the machine's useful life. Lenders may require a down payment.
Dealers often offer financing, and so do banks, credit unions, farm credit lenders and USDA programs. Ask each for the total cost, not only the monthly payment.
Compare interest rate, term, fees, down payment and any penalties for early payoff.
- Rate and term
- Down payment
- Fees
- Early payoff penalties
What about leasing?
With a lease, you pay to use equipment for a period and then return it, buy it or renew. Payments may be lower, but you may not build ownership, and there can be limits on use and charges for wear.
Read the lease terms carefully, including what happens at the end, who pays for repairs and insurance, and what it costs if you stop early.
Ask a tax professional how a lease or a purchase affects your taxes.
- What happens at the end of the lease
- Who pays for repairs and insurance
- Limits on hours of use
- Charges for wear
Is used equipment a good choice?
Used equipment can be much cheaper to buy, and it is common on small farms. The risk is hidden problems and uncertain parts availability. Have a trusted mechanic inspect a machine before buying, and ask for service records.
Check that the seller owns the machine free of liens. Ask about safety features such as shields and rollover protection, which older machines may lack or have damaged.
Buying from a neighbor feels easy, but still get a written bill of sale.
- Have a mechanic inspect the machine
- Ask for service records
- Confirm no liens
- Get a written bill of sale
What costs do people forget?
Besides the price, owning equipment means fuel, repairs, tires, insurance, storage and time for maintenance. Attachments and implements add to the total. Depreciation, the loss in value over time, is a real cost even though it is not a bill. Many farmers say the true cost of a machine only became clear after the second year of owning it.
Add these to your cost of production for the enterprises that use the machine. If the machine is rarely used, its cost per hour can be very high.
- Fuel and oil
- Repairs and parts
- Insurance
- Storage and shelter
- Operator training and safety gear
How can sharing work?
Some farms share equipment with neighbors or form informal co-ops. It can reduce costs, but it can also cause conflict about scheduling and repairs. Agree in writing on who owns it, who pays for what, who has priority and what happens if it breaks.
Check insurance before anyone else operates your equipment. Your policy may not cover borrowers.
If a borrower is hurt on your machine, you could be responsible, so tell your agent about sharing arrangements.
- Agree in writing who owns it
- Agree who pays for repairs
- Agree who has priority in busy weeks
- Check insurance first
How do you decide?
Ask three questions: Do I need this machine, how will I pay for it in a bad year, and is there a cheaper way to get the work done? If the answers are clear, you can proceed with more confidence.
Talk to your lender, a tax professional and an experienced neighbor. Do not buy under pressure or on the day you first see a machine.
A short list of pros and cons for each option, written down, often makes the answer clearer.
Key takeaways
- Choose between buying, leasing, renting, hiring and sharing based on real hours of use.
- Compare total cost, not only the monthly payment.
- Inspect used machines and confirm there are no liens.
- Write down any sharing arrangement and check insurance.
- Ask a tax professional how buying or leasing affects your taxes.
Sources and further reading
Last reviewed: November 12, 2026. Written by the Rural Farm Life Editorial Team. See our editorial policy.