Farm Equipment Financing in 2026: Strategic Moves Amid Margin Pressure

By Brian Legried, Senior Vice President, AgDirect_®

U.S. producers enter 2026 under continued tight margins and weak commodity prices, prompting shifts in equipment financing strategies. Based on the AgDirect team’s analysis of 2025 trends and early indicators for 2026, producers and dealers can prepare for another year where cash flow management and inventory decisions take center stage.

Macro-economic signals to watch

The Federal Reserve lowered the federal funds rate three times in 2025, with cautious optimism for further easing or stabilization in 2026—which would result in a positive backdrop for financing.

Softer commodity prices and persistent input costs keep cash flow central, shaping capital strategies and delaying major upgrades.

Dealer sentiment heading into 2026

Dealers report heightened focus on moving late-model, high-dollar used units, weighing whether to hold inventory or liquidate through auctions. This increase in dealer auctions, combined with stabilizing interest rates, could create more buying opportunities with increased inventory for sale through the auction channels. In other words, 2026 could be a good time to upgrade with late model equipment.

Buyer sentiment and trends

Producer sentiment is disciplined—not pessimistic—leaning on refinancing, leasing, and liquidation auctions to preserve cash and align payments with revenue cycles. Seasonal activity may soften, but early-year auctions and aggressive dealer pricing could spur movement.

Auctions and private sales

Continuing concerns over reduced income and cash flow cause producers to be more cautious about large capital purchases. Auctions and private sales offer cost-effective alternatives to new equipment, requiring fast, flexible financing. Refinancing remains a key tool for easing cash flow and lowering interest expenses, while leasing continues to gain traction for predictable costs and lower upfront payments.

Equipment demand outlook

OEMs have scaled back new production as dealers work through substantial used inventory—a process that may take another year. Demand will favor late-model used machines, with auctions and private channels vital for buyers seeking value. Elevated inventories—particularly one- to two-year-old high-dollar units—will pressure pricing, while financing structures like leases and refinances help match buyers to supply.

Large ag equipment, such as tractors and combines, will stay sensitive to pricing and residual value expectations, while midsize equipment may see valuations remain steady.

Opportunities and Risks for 2026

Opportunities

• Improving rate stability: Easing or steady rates can increase buyer comfort with financing and refinancing decisions.
• Efficiency-focused upgrades: Strategic purchases (including leasing) improve cost predictability and operational efficiency.
• Resilient used-equipment channels: Auctions and private-party markets remain active and well-matched to cash-conscious buyers.

Risks

• Cost pressures and policy uncertainty: Persistent input costs and potential policy changes can weigh on margins and timing.
• Commodity volatility: Price swings may impact cash flow and delay large purchases.
• Inventory overhang could affect pricing and dealer margins into mid-2026.

What financing partners should focus on

Stay responsive to shifting buyer behavior, especially toward auctions, refinancing, and leasing, and offer solutions that prioritize cash flow management.

Closing thoughts

By embracing flexibility and anticipating market trends, both producers and dealers can emerge stronger as the industry transitions toward renewed stability.