Can You Buy a Pickup Truck With a USDA Loan?
If you need to buy a truck it can be hard to find a good loan with a low interest rate. Maybe you have heard of USDA mortgages and wonder if there’s a similar vehicle loan. The truth is that the USDA does not offer a general car buying loan, like its general mortgage. But a new law makes certain farm trucks such as flatbeds eligible for a USDA Farm Storage and Facility Loan.
USDA Farm Storage and Facility Loan
The United States Department of Agriculture (USDA) offers a variety of low-interest loans to farmers. These loans can help farmers purchase new land, reorganize their operation on the land they already have, or cover yearly expenses.
One type of loan is the USDA’s Farm Storage and Facility Loan. Until recently, this loan only covered food storage facilities. But as of 2018, the Department is expanding this program to help farmers purchase trucks for farm work. The trucks in question can be light-duty trucks with a flatbed, compact trucks, or even cargo vans, but they cannot be pickup trucks.
Who is eligible for the USDA Farm Storage and Facility Loan
The Farm Storage and Facility Loan may be a desirable, low-interest rate loan, but it is not available for everyone. Eligible farmers must be buying facilities to store–or equipment to transport–specific commodities. These include:
- milk, cheese, yogurt, and butter
- meat/poultry (unprocessed)
- fruits and vegetables
- maple and honey
- pulse crops
- renewable biomass
What trucks are eligible for this USDA loan?
Not every vehicle qualifies for the USDA’s Food Storage and Facilities Loan. The vehicle in question needs to be designed or modified to transport and store eligible commodities.
Ineligible vehicles include pickup trucks, semi-trucks, dump trucks, and simple insulated and ventilated vans. Trucks 15 or more years old usually do not qualify. Older trucks must be reviewed, case-by-case, by the national office. Trucks with five or more axles and a gross weight over 60,000 pounds also do not qualify. Finally, the loan is not for trucks that cost over $100,000 or have a salvage title.
There are four classes of trucks that the USDA intends to loan this money for:
- Flatbed Trucks: These simply don’t have permanent sidewalls on the bed for ease of loading. Eligible flatbeds range from compact to full-size. They can be rated for light, medium, or heavy duty.
- Cold Storage Trucks: Most of these trucks are equipped with mechanical refrigeration, but ice-cooled trucks are also eligible.
- Grain Trucks: This class of equipment is manufacturered specifically to haul grain. It is a truck chassis with a dumping body to transport grain from the field to storage or an elevator.
- Box Trucks, Box Vans, or Straight Trucks: Officially called “storage trucks with a chassis unit.” These are defined by having the enclosed cargo body on the same chassis as the cab and motor.
Other truck loan options
Many farm trucks are eligible for the USDA’s Food Storage and Facilities Loan. But if you need a vehicle not on this list, you have other options.
For instance, you can apply for another USDA loan such as a Farm Operating loan or a Beginning Farmers and Ranchers loan. You will need to create a business plan and list the truck you need among the equipment you plan to purchase.
In addition, you can reach out to a credit union for farmers or for residents of your area. Credit unions often approve interest rates lower than the national average.
Finally, if you operate your farm as an LLC, you can likely write your truck purchase off on your vehicle taxes. Read about this handy tax loophole. Or read about more unexpected ways to get a truck loan.