What is an Operating Lease?

Teresa Olson
By Teresa Olson April 30, 2015 10:57 Updated


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Are you considering acquiring additional farmland?  Do you have plans for retiring in the near future?  Maybe you’re looking at expanding the size of your operation or seeking ways to reduce your taxable income.  Whatever your situation is, CNH Capital has a financing option that might benefit you.  An operating lease is definitely something you should consider, and here are some reasons why if you’re looking at equipment:

1. It reduces taxable income because you can write off the payment as an expense.

2. You have access to newer equipment which means less maintenance costs.

3. With lower payments you improve your cash flow, freeing up funds to use elsewhere in your business

4. You have financing that’s off your balance sheet – debt that’s not shown on your books.

5. You have lease flexibility at the end of the lease period whereby you can purchase the unit or walk away.

6. You remove the potential risk of equipment ownership.

An operating lease allows the lessee to acquire the use of equipment for a fixed cost, and there are no down payments on these leases, unlike retail loans which may be structured with a 10%-20% down payment.  Additional services such as maintenance, extended warranty, and insurance may be provided by the lessor and bundled into one convenient monthly payment.  Operating leases also provide special cash flow needs:

1. Flexible, customized payment schedules.

2. Skip or seasonal payments to accommodate business cycle/projects.

3. Match lease term to cash flow (seasons of use).

Each person’s situation is different, and so you should seek legal and/or professional advice from a CPA or tax advisor to see what might be best for you.  If you have questions about operating leases or anything else, contact your local dealer.

-Terry Olson, Titan Outlet Store Team







Teresa Olson
By Teresa Olson April 30, 2015 10:57 Updated
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