Machinery Finance Calculator

How Farm Machinery Finance Works

Most UK farm machinery purchases are funded through hire purchase (HP) or conditional sale agreements. You pay a deposit, finance the balance over an agreed term, and own the machine outright at the end. Monthly repayments are calculated using standard amortisation — the balance reduces with each payment so the interest element falls and the capital element rises over the term.

VAT (currently 20%) is typically charged on the purchase price and is reclaimable on your next VAT return if you are VAT registered. Many farmers choose to finance the VAT amount to avoid a large cash outflow before the reclaim arrives — the "Add VAT to finance" option in this calculator models this scenario.

Worked Example: £80,000 Tractor at 7.2% APR

Increasing the deposit to £30,000 reduces the balance to £66,000, cutting the monthly payment to £1,315 and saving approximately £2,000 in total interest over the term. Enter your own figures above to model different scenarios.

Frequently Asked Questions — Farm Machinery Finance

What is a typical APR for farm machinery finance in the UK in 2026?

Agricultural machinery finance in the UK typically ranges from 5.9% to 9.9% APR for hire purchase or conditional sale agreements in 2026. Manufacturer-backed schemes (John Deere Financial, AGCO Finance, CNH Industrial Capital) sometimes offer promotional 0% rates on specific models, but these are usually offset by a higher list price. Farm finance through a bank or specialist agricultural lender typically runs at 6–8% APR. If APR is left blank in this calculator, it assumes 0% interest-free finance.

Should VAT be included in the financed amount?

This depends on your VAT registration status. Most farming businesses are VAT registered and can reclaim VAT on machinery purchases. However, VAT is typically due to HMRC before your quarterly VAT return, so many farmers choose to finance the VAT amount to avoid a large upfront cash outflow. The "Add VAT to finance" toggle in this calculator lets you model both scenarios. If you are not VAT registered, toggle "Price includes VAT" off and include the VAT in your purchase price.

What is the difference between hire purchase and lease finance for farm machinery?

With hire purchase (HP) or conditional sale, you own the machine outright at the end of the agreement — this is the most common structure for agricultural machinery in the UK. With a finance lease, the lender retains ownership and you make regular payments for the right to use the asset; there is usually a balloon payment or asset sale at the end. For most UK farm businesses, HP or conditional sale is preferable because the asset appears on the balance sheet and capital allowances can be claimed. Always take advice from your accountant on the most tax-efficient structure for your business.

How does deposit size affect total interest paid?

A larger deposit directly reduces the balance to finance, which reduces both the monthly repayment and the total interest paid. For example, on an £80,000 tractor at 7.2% APR over 60 months: a £10,000 deposit leaves a £70,000 balance with around £13,600 total interest; a £20,000 deposit leaves £60,000 with around £11,700 total interest — saving around £2,000 in interest alone. In general, every additional £10,000 of deposit on a 60-month, 7% APR agreement saves approximately £1,900 in interest.