Although the majority of farmers still choose to purchase their equipment and machinery, more are seeing the value in leasing. It requires fewer upfront costs while providing several advantages, including immediate use and the latest technology in agriculture.
Find the right lease agreement for your farm and gain a better understanding of the different factors involved in leasing farm equipment to see if it’s a good option for you.
We want to always help our customers make the best, most informed decisions when it comes to financing, leasing, and other funding choices. Let us help you determine what type of lease might be most beneficial to your farm’s long-term productivity and growth.
What Are the Different Leasing Options?
There are two general types of lease plans, namely an operating lease and a finance lease. Once you find out which works best for you, you can start looking at agricultural equipment finance companies.
An operating lease allows you to use farm equipment without purchasing it beforehand. In this type of contract, the leased items and their liabilities are not included in your balance sheet. It is reported as an ordinary expense in your tax returns.
At the end of the leasing contract, you have the option to return the equipment or extend its lease. Some lessors also offer to sell the leased item, with its price set on its value after use.
Also known as a ‘capital lease’, a finance lease allows you to buy equipment for the remainder of its operating life. Your payments to the lessor are divided into principal and interest, with the latter being tax-deductible. At the end of your contract, you have the option to return the item or offer to buy it with the balloon amount of the equipment.
How Does Leased Equipment Impact Productivity?
No matter which type of lease you choose, both can provide advantages that positively impact your farm’s operations.
Access to Updated Technology
With the right lease, you gain exclusive access to the latest farming tools and equipment. It helps you reduce redundancies and streamline operations on your farm. Your lessor can revise your contract and replace your leased equipment with the latest model as soon as you want.
Access to Expert Repairs and Maintenance
In an operating lease, the lessor may be responsible for equipment maintenance and repairs. Some lessors provide temporary replacements to prevent unnecessary downtime in your operations.
Access to Equipment at Lower Costs
In a finance lease, you have the option to purchase the equipment at the end of your contract. The balloon amount you have to pay is still less than the equipment’s original price. It allows you to invest more money in areas that improve efficiency, such as hiring more people.
Regents Can Help You Find the Perfect Financing or Leasing Option for Your Agricultural Equipment Needs
With the right solutions, you can future-proof your farm. Regents Capital Corporation provides you with leasing and financing options that suit your needs. And our expert team will help you determine the best plan for your farm.
Learn more about our financial services by contacting us today!