How long should I finance a farm machine or tractor?
Add a second term to the loan box, and the sheet runs both terms side by side: the repayment schedule, the interest as it is paid and the present value of cost over the same horizon. A longer term lowers the repayment and raises the interest, and the sheet shows which costs less in today dollars.
Does a longer term always cost more in today dollars?
Usually, because the interest is paid for longer, but the sheet does not assume it. It builds both terms on your own rate and shows the repayment, the interest year by year and the present value of cost, so the extra interest and the lower repayment are read together rather than guessed at.
How do I add a second term to the sheet?
Add the line compare term months | 84 to the bank loan offer box. The sheet then builds both terms over the same horizon and shows the two present values side by side, with every rate and residual still labelled your own assumption.
Frequently asked questions
Do the two terms have to be on the same rate?
The sheet compares the terms on the rate you paste, so the two are compared like for like. If a lender offers a different rate for a longer term, run the second rate as a second finance offer and the cheaper option in today dollars is named for you.
Which term does the sheet recommend?
None. It names the cheaper term in today dollars on your own figures and by how much, and it labels every rate, residual and effective life an assumption. Choosing the term, and the repayments you can carry in a lean month, is your decision with your lender.
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