Financial Benefits of Leasing

In addition to the many business and tax benefits you’ll gain by leasing, such as being able to replace your equipment sooner and lowering your taxes, leasing will also enable you to:

Spend Less for the Same Equipment

When you lease your equipment, you usually only have to pay a portion of the actual cost – you get the full value without paying full price. In addition, leasing may help you take advantage of special manufacturer pricing when it’s available, rather than when you’re prepared to purchase it.

Pay Nothing Down

Leases don't usually require a down payment. Instead, you only make the first lease payment. This will give you greater flexibility in choosing your equipment and leave you needed cash for other parts of your business.

Reduce Your Maintenance Costs

Older equipment usually costs more to operate. When you lease your equipment and update it regularly, you can always have reliable, low-maintenance equipment.

Control Your Cash Flow

You can match lease payment schedules to suit your needs – even if you have uneven cash flow patterns. Payment schedules can be customized based on a monthly, quarterly, semi-annual or annual basis, or even based on your harvest season. You can skip or defer payments, or step them up as needed.

Improve Your Balance Sheet

With an operating lease, the equipment comes off your balance sheet and instead appears as an operating expense. This improves your financial ratios, such as debt-to-equity ratio, the current ratio (liquidity), and return on assets (ROA). Capital leases can offer you different benefits.

Create a New Lease Financing Source

A Farm Credit Leasing lease line will allow you to respond quickly to new equipment needs and leave your other lines of credit available for other business uses.

Avoid Price Increases

If rising prices are a concern, leasing can help by locking in your costs over the life of the lease.

Be sure to consult an accountant about which type of lease is right for you.