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Leasing: A financial tool with a time and purpose.

Dec 11, 2017, 12:36 PM

While at the recent Farm and Ranch Expo, I took part in a number of conversations about leasing—and I want to share some of the discussions I had with customers about that topic.

Leasing is much like one of the many tools in your grandfather’s tool box. You don’t use all the tools equally or all the time. But each has its distinct use and purpose. Leasing is just another

financial tool that has a certain purpose at certain times—and can be used to add great value to your operation.

Here are some of the common questions I heard at the expo:

Q: Why is leasing suddenly being talked about? My dad always cautioned me to avoid the latest “hot topic:…

A: In fact, leasing has been around as equipment has been sold. It’s not about chasing the latest trend. When used correctly, leasing can add great benefits to your operation, including:

• Conserving cash

• Strengthening your balance sheet

• Creating payment/financial flexibility to match your cash cycle

• Tax deductibility of lease payments

• Ability to keep equipment and technology current with changing demands

• Same day turnaround

• Ability to meet immediate equipment and technology needs without making a long-term commitment

• Reduced cost on underused equipment

Q: I would like to try out some new technology…am I able to lease short term?

A: Leasing is an effective way to expand your operation and try new technology without making the long-term commitment of purchasing. We have many young farmers who lease equipment that benefits their family operation. It’s a great way for young farmers to get started and have some “skin in the game” with the operation. It is very common to execute one- and two-year leases as the operation determines if that particular piece of equipment or technology will contribute to the success of the operation.

Q: Do you offer package leases?

A: Yes, we offer a wide variety of leasing products that we tailor to fit your operation and specific situation. Many times we write leases that include one payment for a “bundle” of like equipment—a combine, corn head, draper head and grain cart, for example. We are able to structure a lease with one annual payment on everything needed for harvest. Not only does it help manage costs and cash flow, leasing also creates the ability to avoid long term obligations—allowing you to grow and stay current with changing environments.

Leasing is about keeping your working capital for its intended purposes such as getting your crop in the ground and tending to it as it grows. As our economic cycle in agriculture shifts, we need to dig into the tool box and select the financial tools that can help us remain profitable, without sacrificing our operation or our ability to capitalize on opportunities that arise. Leasing is one of those powerful tools—and the time to use it may be now.

Speak with one of your 21st Century Equipment sales professionals about leasing any of our new or used inventory. They can put together a package for you that makes sense for your operation.

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