In today’s economy, being a farmer requires you to be creative while also making the most of your budget. You should be aware that equipment leasing is one method for ensuring you have the equipment you require without going over budget. This is a low-cost, low-maintenance option to purchasing equipment. The advantages do not end there. In fact, this is only the beginning.
Anyway, here are some advantages to leasing farm equipment rather than purchasing it.
- You can keep your farm well prepared.
As the economy shifts and changes during these difficult times, some industries benefit while others suffer. The agricultural economy is not doing well right now, so you must do everything possible to use your money wisely and keep your business running.
When it comes to farming, time is everything, and you need your machinery to be on point at all times. In this case, agricultural equipment leasing can be a good option because it allows you to always have working machinery, whereas breakdowns and short crops could otherwise leave you high and dry.
- Receive tax breaks
Taxes are every business owner’s nightmare, but there are always ways to make them a little less painful. When you choose farming equipment financing over buying, you can deduct the entire payment as a business expense. This is not unique to leasing, but it is a bonus because you will not have to spend as much money in the first place.
- Experiment with different equipment.
Farming is a rather delicate task, which requires precision and expert knowledge; each farm has unique needs that demand the use of distinct methods and equipment. When you buy farm equipment, you commit to using it until you can afford to upgrade. When you lease equipment, you are only required to keep the equipment until the term is up, which allows you to experiment with a wider range of equipment. Take advantage of the quick turnarounds to learn and adapt more quickly.
- Keep up with technological advances.
The truth is that you can never buy a lot of equipment at once. If you just bought a new tractor, chances are you will not be upgrading for a while. But since technology never stops evolving, you are always losing out on technological advances.
You can upgrade your equipment at any time with equipment leasing. You simply return your current equipment and begin leasing an upgraded model.
If you prefer to see the lease through to the end, that is fine as well! Leases are typically for a set period of time. A lease is typically completed in two to five years.
All of this means that you can actually keep up with newer farming technology, which is a huge advantage if you want to stay ahead of the competition. Not only that, but you will not have to worry about losing a significant amount of money every time you want to sell your old equipment and upgrade.
- Boost your income.
Cash flow comes from the latest crop for farmers. The issue is that crops are erratic, and a crop that does not perform well can seriously impact your cash flow. Expensive equipment necessitates large down payments, which further impedes cash flow.
Leasing farm equipment allows you to keep more working capital on hand, which you can use to improve your business in a variety of ways.
All of this means that you can keep up with newer farming technology, which is a huge advantage if you want to stay ahead of the competition. Not only that, but you will not have to worry about losing a significant amount of money every time you want to sell your old equipment and upgrade.
- Reduce your payments.
Unless you pay for your farming equipment in cash, you will have to make monthly payments whether you lease or buy it. Typically, you will pay less for leasing equipment and will not have to jump through as many hoops to qualify. Furthermore, leases are always negotiable, so you can always work with your lessor.
The bottom line is that leasing equipment reduces your financial risk significantly. Spending large sums of money on equipment only puts you in a precarious position. Nobody ever goes out of business because they have extra money in the bank. As a farmer, you understand how quickly a single season can alter your capital funds.