Alternative financing solutions to consider for your customers.
In the ever-evolving agricultural equipment and machinery financing landscape, leasing has become an increasingly important tool, offering customers a cost-effective and flexible alternative to outright purchases or loans.
“This trend is driven by several factors that reflect the changing needs and challenges of today’s farming practices,” says Chris Schimke, AgDirect territory manager. “One of the key drivers includes the fluctuating economic conditions and high initial costs associated with purchasing farm equipment.”
“At the same time, farmers are facing increasing pressure to adopt advanced technologies that improve productivity, while rising demand for sustainable and precision farming practices fuels the need for specialized equipment,” he explains.
For agricultural equipment dealers, embracing leasing as a financing option can unlock new opportunities for growth and customer satisfaction in an increasingly competitive market.
Distinct advantages of leasing equipment
Higher borrowing costs impact both leasing and purchasing of farm equipment, but leasing can have distinct advantages for customers depending on their individual circumstances.
Conservation of Capital: One of the primary benefits of equipment leasing is saving customers from paying large capital outlays. With only the first rental payment due at close and predictable payments, leasing is an excellent way to improve cash flow and free up working capital for other investments.
Financial Flexibility: There are several options to structure a lease to fit a customer’s unique needs. Payments can be tailored to match cash flow requirements whether that means a monthly, quarterly, semi-annual or annual payment schedule. There’s also flexibility at lease end with options to purchase, trade, renew or return the equipment later.
Risk Mitigation: In addition to providing access to the latest advancements, leasing ensures equipment remains in optimal condition through the lease term, minimizing downtime and enhancing operational efficiency.
Tax Benefits: From a tax standpoint, leases are classified as either true leases or conditional sale leases. With a true lease, lease payments can be deducted as an operating expense, rather than depreciating the asset. With a conditional sale lease, depreciation is taken on the asset just as with a loan.
Access to Specialized Equipment: Leasing enables customers to access specialized equipment that may be prohibitively expensive to purchase outright. This is particularly beneficial for customers who frequently trade equipment, or small and medium-sized operations that may not have the economies of scale to justify ownership.
“By offering a competitive lease product at an attractive rate, dealers can provide customers with a flexible financing option tailored to their specific needs which can help boost new and used equipment sales and generate repeat business,” says Schimke. “Plus, leasing can increase equipment sale add-ons due to the nominal increase to a customer’s payment over the term of the lease.”
“As customers consider the advantages of leasing, it’s a good idea to encourage them to consult with their accountant or financial advisor to evaluate whether leasing aligns with their operational goals or tax situation,” Schimke adds.
Your partner in equipment leasing
Farm equipment leasing encompasses a wide range of new and used machinery, including tractors, combines and other harvesters, planters, sprayers, forage and hay equipment, irrigation systems and other specialized equipment essential for modern agricultural practices.
As the demand for equipment leasing continues to rise, a trusted financing partner can make all the difference when it comes to developing custom finance solutions that align with your business objectives and customer requirements
Built for agriculture and powered by Farm Credit, AgDirect stands at the forefront, offering true leases and conditional sales leases tailored specifically for both new and used equipment acquired from a dealer, auction company, an online platform or marketplace, or private party.
“At AgDirect, we understand the unique financing needs of agricultural equipment dealers and their customers,” says Schimke. “Our flexible lease options are designed to meet the specific requirements of farmers, offering competitive rates and tailored payment structures to maximize cash flow with 100% financing for all brands and types of equipment.”
Article Written by AgDirect
To learn more about equipment lease options from AgDirect, call your AgDirect territory manager or 888.525.9805. Visit agdirect.com to check rates, quote payments, compare options, and submit applications for financing and refinancing.
AgDirect is an equipment financing program offered by Farm Credit Services of America and other lenders, including participating Farm Credit System Institutions.
