Meaning & Benefits of Leasing Farm Equipment

When it comes to agricultural efficiency, farmers need various farming equipment for every operation. Equipment speeds up agricultural operations and brings efficiency. However, buying all these machines and equipment can be costly. Moreover, efficiency comes from access to the equipment, not its ownership. It means that to achieve production efficiency, farmers don’t need to buy every tool and equipment. Equipment leasing is a feasible solution to get the needed equipment without blowing your budget. In uncertain and highly competitive market conditions, leasing equipment can be the perfect option. Farmers often don’t have a high budget to purchase expensive tractors, grain bins, and other equipment. To avoid investing a significant amount of money, leasing provides a low-cost alternative to purchasing. So, what exactly leasing is, and how it can benefit farmers? Let’s find out!

What Is Equipment Leasing?

All industries from construction to agriculture need several machines, tools, and equipment for various operations. However, businesses usually don’t have enough funds to buy all the latest machines and equipment. And this is where leasing comes in! Equipment leasing gives you access to the needed equipment without making the down payment. It is a contractual agreement where you agree to make regular payments in exchange for using the equipment. It is similar to renting equipment, however, at the end of the lease, you could either return the equipment to the lessor or buy the equipment if the contract allows.

Benefits of Leasing farm Equipment

The leasing companies provide flexible leasing options that help businesses and farmers get access to the best equipment. If you finance equipment, you have to pay a down payment, interest amount, and monthly installments. Over the loan period, the interest rate could go up and if you miss the payments, there’s a risk of losing both the equipment and collateral asset. However, no such risk is involved in leasing equipment. Here are some more benefits of leasing agriculture equipment.

  1. Get Latest Farm Equipment

The farming equipment you purchased a decade ago can become outdated with the introduction of advanced machinery. With technological advancements, agricultural tools and machines have become more advanced. However, farmers don’t always have the capital needed to invest in the latest machinery. Using outdated equipment means you’re missing out on an opportunity to boost production capabilities. However, leasing can help you stay updated by providing access to the latest models. You can keep your farm equipped and use the capital efficiently for other operations.

  1. Try Before You Buy

Equipment like tractors doesn’t come cheap. You have to invest a lot of money and you don’t even know if the machine will meet your farming requirements. To avoid buying the wrong equipment, it is best to lease the needed machinery first, try it, and see if it works for your farm.

  1. Improve Cash Flow

Leasing equipment means you don’t need to make a down payment and get the needed machinery for smaller payments. This helps you keep more working capital that can be used for other agricultural activities. The lease also has tax benefits which further improve your cash flow.

Leave a Comment