10 Tips for Leasing Farm Equipment
It’s no secret that grain prices are down, but inputs are still priced high on the farm. We love selling used farm equipment at the Titan Outlet Store, but many people don’t know that we’re also in the leasing game, as well.
The biggest benefit to leasing a tractor or combine is that your farm, as a business, will be preserving cash. You need to find the happy medium between how much use you’ll get out of the equipment, your financial objectives and the cash flow on the farm.
Here are some general guidelines:
1) How long will you be using the equipment? Less than three years, look into a lease. More than three? Consider buying your next tractor.
2) Budget wisely. Watch your monthly payments and choose the option that takes the smaller bite out of your wallet come payment time.
3) Mind your down payment needs. If you’re low on cash, you’ll be able to get into a leased unit easier than when purchasing because the down payments are usually lower. The upside to buying with a considerable down payment is the initial equity will be higher.
4) Leases let you cut ties with your equipment when it isn’t making you money. Done with that combine after harvest? Return it after you get what you need out of it – don’t pay for it when you’re not using it.
5) Equipment can get old too fast – don’t let your fleet become obsolete. With a lease, you can stay in equipment with the newest tech much easier.
6) Talk to your financial team before making a decision: your banker, accountant and implement dealership finance guy before making any decisions. Make sure you’re making the right choice for your unique circumstances.
7) Lean times could be the time to expand. If you’ve got plans to grow, look into a master lease that could allow you to get a few more pieces of equipment under different schedules with the same terms and conditions – meaning you’ll get newer equipment at more favorable rates.
8) Explore all options. If you’re wanting to trade up or not stick with the same combine or tractor for a few years, think leasing. Check the terms to make sure your business plans match up with your equipment use.
9) How’s your credit? If you have a nice line of credit with ample room for loans, look into financing a purchase. Conversely, if you don’t want to stretch that credit too thin, lease with a different agency to spread the capital around.
10) Get ready for tax benefits. If you finance with a loan, tax benefits through depreciation will be yours for the taking. If your farm or ranch business won’t benefit from these tax breaks, a lease sounds like the better choice.
The Titan Outlet Store is pleased to announce a 39-month lease option with just a half payment up front. Please call the store for details on this leasing offer.
Hat tip to Agriculture.com, who offered some great pointers on leasing equipment on this slideshow.
-Al Winmill, Titan Outlet Store Team