Tractor Zoom Monthly Financial Digest: April 2025
4/24/2025Welcome to the April edition of Tractor Zoom’s Monthly Financial Digest, your go-to resource key updates, trends, and expert insights from the equipment and agricultural finance sectors. Curated with ag lenders, farm credit institutions, and loan officers in mind, this digest provides valuable perspectives and data to help you navigate the challenges in the evolving ag finance landscape.
Understanding tariffs and their impact on ag lender decision-making
Tariffs have been a growing concern for financial institutions in the past couple of months. As Tractor Zoom Customer Success Manager Jesse Scott points out, "Tariffs create uncertainty, particularly when it comes to equipment prices, which can fluctuate depending on where the equipment is manufactured." As tariffs increase the cost of equipment, farmers may reconsider or delay their purchasing decisions, affecting lenders' loan portfolios.
For ag lenders, the challenge comes in managing the value of collateral. Jesse explains, "Farmers who have been considering new equipment may hold off or look for alternatives, such as borrowing from neighbors. When it’s time for renewal on lines of credit, though, the collateral still needs to be re-evaluated and lenders may be forced to adjust the loan amount." This can lead to reduced loan-to-value (LTV) ratios, making it more challenging for lenders to secure profitable loans. In addition, the price increases may cause farmers to experience cash flow strain, further complicating loan approvals.
Key impact points for ag lenders:
- Equipment prices rise due to tariffs, impacting the value of collateral.
- Farmers delay purchases or seek alternatives, reducing demand for financing.
- Loan-to-value ratios may decrease, requiring revaluation of collateral and affecting loan amounts.
How Tractor Zoom Pro can help: Tractor Zoom Pro’s Equipment Search solution gives ag lenders the ability to quickly assess the value of equipment in real-time. By using up-to-date equipment valuations, lenders can make more informed decisions when determining loan amounts and mitigating risks associated with price fluctuations.
Spring 2025 Equipment Market Report: Key insights for ag lenders
As we move into the spring operating season, the equipment market has shown both volatility and opportunity. As noted in our Spring 2025 Equipment Market Analysis, there’s a shift happening across several categories of equipment–but some segments, like wide-boom sprayers, are still holding strong. These machines are in demand, retaining higher resale values even as other categories face slower movement.
One notable trend is the slower sales of sprayers, which impacts lenders who may be concerned about the depreciation and trade-in value of this equipment. Slower turnover of sprayers increases market risk. Farmers are holding onto equipment longer, which means less equipment is available for trade-ins. That can cause a backlog in used equipment and lower the available collateral for loans.
In contrast, equipment in categories like high-horsepower tractors is in steady demand, particularly in regions where large-scale operations are prevalent. These larger operations, however, are less reliant on loans for purchasing equipment as they often have more valuable land assets. Jesse Scott explains that "large operations are lower risk because they often have land worth more than their equipment. For smaller farmers, however, their equipment is more central to the collateral value, making them more vulnerable to price fluctuations."
Key data insights for ag lenders and farm credit institutions:
- Sprayers: Sales are slowing, and used sprayers are holding their value better than others.
- High-horsepower tractors: Steady demand, with large-scale operations typically avoiding loans due to high-value land.
- Midwest vs. Western regions: Equipment turnover is higher in the Midwest and East, with the West showing slower sales due to lower equipment turnover.
How Tractor Zoom Pro can help: Tractor Zoom Pro’s Market Trends solution can help lenders assess which equipment types are most in demand by region and track pricing fluctuations. By drilling down into state-level data, lenders can gain insights into local market conditions that will impact loan assessments.
Scott explains, "With Tractor Zoom Pro, lenders can quickly analyze trends in specific regions. For example, in the Midwest, sprayers are moving more quickly, but in the West, they’re sitting longer. This helps lenders adjust their approach to equipment appraisals and risk management."
Tractor Zoom’s seminar for CoBank in Oklahoma: Key takeaways
In April 2025, Tractor Zoom participated in an exclusive seminar hosted by CoBank, where we shared insights with several farm credit institutions, including Oklahoma Ad Credit. This was a valuable opportunity for lenders to see firsthand how our data can help them make better-informed decisions. CoBank and its partners were particularly interested in how Tractor Zoom Pro can offer more granular market data for equipment appraisals and decision-making.
Key lecture insights:
- The trend of increasing demand for cotton pickers in the South and Southeast is driving pricing and availability issues in these regions. As tariffs impact the cost of new equipment, farmers are holding onto their cotton pickers longer, which is contributing to slower turnover and potential collateral valuation concerns for lenders.
- There is a significant pricing gap between retail and auction markets for used equipment. Auction prices are often 20-30% lower than retail, creating opportunities and challenges for dealerships and lenders alike, especially when it comes to valuing equipment for loans and ensuring accurate risk assessments.
- Understanding regional differences in equipment demand is crucial for managing risk. For example, while sprayers are in high demand in certain parts of the country, they are seeing slower turnover in other areas. Recognizing these regional nuances allows lenders to adjust their strategies and make more informed decisions about collateral and loan-to-value ratios.
CoBank’s sponsorship of this event highlighted the increasing need for region-specific data. Tractor Zoom’s platform offers real-time market insights that provide lenders and dealerships with the detailed information they need to navigate these challenges and mitigate risk effectively. Because as Jesse notes, “it’s not just about national averages, but understanding what’s happening in your backyard that makes a big difference."
Ready to take the next step? Book a demo of Tractor Zoom Pro
As an ag lender, understanding market trends and managing collateral risk is crucial to your success. Tractor Zoom Pro provides you with the tools to assess equipment values, track market fluctuations, and streamline your lending processes.
Book a demo today to learn how Tractor Zoom Pro’s solutions can help your institution stay ahead of market shifts, reduce risk, and improve decision-making for loan officers, risk assessors, and chattel appraisers.
Stay tuned for next month’s financial digest, where we’ll continue to provide you with valuable insights and updates tailored to ag lenders and financial professionals.