How a Tractor Lease Can Improve Your Business

Getting ready to buy a tractor for your business? Are you just starting out or have you been in business for years? Whether you’ve been at it for a while or just getting started in the farming industry, there are always considerable expenses to operating a farm.

From the costs of daily operations, such as fuel, seeds, materials, and other supplies to equipment purchases with a significant price tag, there’s always something to take into consideration for your business expenses.

But did you know that you can take advantage of used tractor leasing to help you get your start or make an upgrade, whether you have all your funds ready or not?

Leasing Helps You Gain Access to Needed Equipment

Of course, the most “affordable” option for any business expense is to buy the equipment outright with cold hard cash.

But realistically, in most situations, this isn’t always going to be an option. Sure, maybe for smaller purchases, but not something as large as a john deere tractor or the equipment you’ll be using with a tractor.

If you don’t have the cash on hand, used tractor leasing will give you the option to add a tractor to your farm’s assets, which you may not have had access to otherwise. When you use a tractor lease, you’ll get to use the tractor on day one and pay it off over a number of years (dependent on your lease agreement).

Tractor Leasing Spreads Out Your Expenses

Rather than paying everything upfront, you’ll distribute the “cost” over each month for a number of years, depending on what your agreement states. In other words, instead of suddenly spending thousands of dollars in one day, you’ll only be making smaller payments each month until you’ve paid it off.

If you like to have a reliable cash reserve, this allows you to maintain a certain amount of your cash as a safety net as you pay off your tractor lease.

You Get Options at the End of Your Used Tractor Lease

Because of the way that used tractor leasing is designed, farm owners will have an important option available to them as they structure their leasing deal.

On one hand, you can choose to keep the tractor at the end of your lease (e.g., 2 - 5 years), and make a small “balloon payment,” which covers the rest of your lease and/or a very small percentage of the financing amount at the beginning.

On the other hand, you can choose to simply walk away from the tractor and not have to deal with it again. You’ll avoid having to make the final balloon payment and you’ll get the freedom to look for a different tractor.

Each option is completely viable and will suit farmers differently, depending on their situation. In some cases, it makes more sense to own the tractor at the end, where as in other situations you’ll be better off walking away so that you have the flexibility to choose another tractor (or other type of equipment).

One of the tax benefits for leasing a used tractor is you could write off the entire tractor lease payment.  Leasing tractors can give you the luxury of having a full deduction of lease payments against current earnings. For example if your tractor lease payment was $2K a month. The farm could write off 24K a year off of the farms taxable income. The lease agreement must be written as an FMV lease agreement. Where at the end of the lease you have three options. You can purchse the equipment for its then Fair Market Value, return the equipment or renew the lease. 

Additional Tax Benefits

Another tax benefit is utilizing section 179 for your Farm. Farmers can depreciate the entire equipment cost up to $500,000 in 2017. 

However, you should consult a tax professional regarding this matter because each type of lease has different accounting for tax purposes.

Where can I get tractor leasing?

At Trust Capital USA, the approval for a tractor leasing application only takes approximately 2-4 hours. The company offers an easy application process that can be found on their website. You won’t need to wait for a long time before your application gets approved.

You don’t need to worry about your credit when you apply for your leasing program.

Once your application is approved, Trust Capital USA can offer you same-day funding and pre-funding for used farm equipment vendors.

Trust Capital can also approve you for a used tractor sale leaseback. This will give you 70% LTV of your appraised used  tractor to inject working capital back into your business for operational expenses such as expanding your farm & bringing in more inventory.  

Farm equipment leasing has an easier and faster application approval process than traditional bank loans.