From commodity prices to weather patterns, agriculture is a profession filled with uncertainty and conditions over which producers have little control.
While the COVID-19 pandemic posed additional challenges for the agriculture sector, low interest rates have served as a silver lining for producers looking to refinance their farm and machinery debt.
“Interest rates remain at historic lows, so it’s still a great time to refinance existing equipment loans with captive finance companies to save on interest and improve cash flow,” says Dan Takle, AgDirect territory manger in Iowa.
“Locking in low rates on intermediate term assets like machinery and equipment when there is an opportunity to do so makes good business sense, and now is the time to act.”
The right time to refinance
Unless you have one payment left on a loan, or the interest rate you can get by refinancing is close to your current rate, it almost always makes sense to refinance higher rate notes, Takle explains.
Similarly, he says another good time to consider refinancing is after an interest waiver period.
“Let’s say you take advantage of a captive finance company’s interest waiver period for the first two years of a five-year loan. If the rate after the interest waiver period expires is higher than the current AgDirect rate or what another lender is offering, then you should definitely explore refinancing those notes.”
“For dealers, helping customers save with a refinance can also help build good will and strengthen relationships,” he adds.
AgDirect, one of the fastest-growing farm equipment financing brands in the nation, is well-equipped and experienced in handling refinancing activity. In addition to competitive rates and ag-friendly service, dealers and their customers can count on a fast and streamlined application process.
Steps for refinancing
With AgDirect, the steps for refinancing are simple, easy and require minimal information.
“In most cases producers can have their dealer process the refinance, the dealer just needs to request a payoff from the bank or captive finance company and fill out an application on their AgDirect dashboard,” says Takle.
“The application usually takes less than five minutes. AgDirect will make the payoff to the bank or captive finance company, and if the producer is willing to sign the loan documents electronically, the dealer doesn’t have to touch the deal again after the application is submitted.”
“Ultimately, refinancing can help producers build flexibility into the cash flow of their operation by stretching out the term length,” says Takle. “At AgDirect, our loans are fully pre-payable which allows you to pay off the loan at any time without penalty.”
Interested in refinancing your farm equipment? Start by comparing your potential savings using AgDirect’s easy-to-use online payment calculator.
Learn more about AgDirect equipment refinancing by locating your nearest AgDirect territory manager or contacting the AgDirect financing team at 888-525-9805.