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Leasing can be an excellent option, a flexible and convenient tool that provides options as your business grows. Call your Farm Credit loan officer today to find out if a loan or a lease is right for your business.
Sometimes the advantages to leasing outweigh the benefits of buying property outright, and there are many reasons you may want to consider a lease with Farm Credit of the Virginias.
Contact us to determine if leasing is a good option for your operation.
Acquiring new equipment almost always creates a drain on working capital, but leasing requires the fewest available funds.
Leasing is sometimes called “one hundred percent financing” because you only have to make the first payment—no down payment required. A typical lease payment can be substantially lower than a loan down payment.
Leasing may offer lower periodic payments and your payment schedule can exactly match your 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 $25,000 may have a residual value at the end of a five-year lease of 15 percent. Lease payments amortize only 85 percent of the original value, or $21,250. You could purchase the truck at the end of the lease for the remaining 15 percent ($2,750), but there would be no obligation to do so.
Leased equipment may generate more tax benefits than owned equipment when the lease is structured properly. While the IRS allows depreciation and interest expense deductions for owned equipment, the entire lease payment can be deductible for true leases.
Working with Farm Credit to acquire equipment is a little like one-stop shopping. Equipment leasing operates on the premise that profits are derived from the use of equipment, not the ownership of it. Leasing allows you to periodically upgrade equipment in order to keep up with technological advances and avoid costly repair and maintenance issues.
Farm Credit provides equipment leasing and related services for virtually all types of equipment used in the agriculture industry. The following are just a few examples.
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