Farm Credit Leasing

Benefits of Leasing Equipment with Farm Credit

Leasing conserves capital

Acquiring new equipment creates a drain on working capital whether the purchaser pays cash, takes out a loan or leases the equipment. Of the three options, leasing requires the least amount of capital.

Leasing is sometimes called “100 percent financing” because it requires no down payment. The only expenditure lessees must make up front is the first periodic payment. The amount of the first lease payment depends upon the payment frequency (monthly, annually, etc.). A typical lease payment, however, can be substantially lower than a loan down payment. In special cases where the transaction needs strengthening because of credit history or type of equipment, some lessors may require more than one payment in advance or an additional security deposit.

Leasing improves cash flow

Besides reducing the initial cash outlay, leasing may offer lower periodic payments and payment schedules can exactly match cash flow patterns.

Lease payments amortize only the portion of the equipment value expected to be depleted during the lease. A new pickup truck valued at $15,000 may have a residual value at the end of a five-year lease of 10 percent. Lease payments amortize only 90 percent of the original value or $13,500. The lessee can purchase the truck for the remaining 10 percent ($1,500), but there is no obligation to do so.

Leasing provides tax benefits

Leased equipment could generate more tax benefits than owned equipment when the lease is structured as a “true” lease. While the IRS allows depreciation and interest expense deductions for owned equipment, the entire lease payment can be deductible for true leases.

Leasing is convenient

Working with Farm Credit Leasing to acquire equipment can be like one-stop shopping. New transportation equipment can be ordered directly from the manufacturer. While customers retain full control of equipment choices, FCL specialists provide price and specification comparisons, order, track production and arrange delivery of equipment. Customers also may choose any type of new or used equipment from local dealers’ inventories. Lease rates are available with a phone call, and application requires only a few simple documents.

Farm Credit Leasing provides equipment leasing and related services for virtually all types of equipment used in the agriculture industry. This includes fleets of automobiles and trucks, ag production and processing equipment, material handling equipment, storage facilities, office equipment and computers, utility equipment, switching and communication equipment.

Frequently Asked Questions

Why would I want to lease equipment?

Equipment leasing is the financing alternative with benefits. It helps you conserve capital, manage cash flow, make the most of tax benefits, and reach your financial objectives. Agricultural producers and cooperatives can add flexibility and convenience to their equipment financing arrangements, conserve capital, improve cash flow and realize tax benefits through leasing. Equipment leasing operates on the premise that profits are derived from the use of equipment, not the ownership of it. The flexibility in leasing comes from the wide range of options built into a lease transaction to accommodate the needs of both the owner and the user of equipment.

What kind of organization should use leasing?

Organizations of all sizes find benefits in leasing equipment. Farm Credit Leasing exclusively serves agribusinesses including full-time farmers, part-time farmers, their cooperatives and rural utilities.

Why should I choose Farm Credit Leasing?

FCL is the largest leasing company in the U.S. exclusively serving agricultural customers. It provides the products that specifically suit the needs of the nation’s producers, their cooperatives and rural utilities. FCL is an affordable and dependable source for lease financing. Its seasoned employees understand agriculture and the special equipment used by agriculture. Its flexible products are easy to use.

What kind of equipment can I lease?

Tractors, combines, farm implements, and dairy equipment lend themselves well to leasing. So do above-ground irrigation systems, farm trucks, processing and packaging equipment, and material handling equipment. If you use it in agricultural production, it’s probably leasable.

What happens to the equipment at the end of the lease?

At the end of the lease, the equipment may be purchased by the lessee or returned to FCL for remarketing or the lease may be renewed. All FCL leases have end-of-lease purchase options. The option varies with the type of equipment.

Contact us today to see if leasing is right for you.