When it comes to buying or leasing, which option is right for you?

From tractors and combines to irrigation systems and grain handling equipment, your operation relies on the right tools to get the job done. But when it’s time to acquire new equipment, you face a key decision: Should you buy it or lease it?

Both options have advantages, and the best choice depends on your financial situation, operational needs, and long-term goals. Here’s a breakdown to help you make the right decision for your farm.

Buying Equipment

When you choose to buy equipment, you’re making a long-term investment in your operation. Once the equipment is paid off, you own it outright, which means there are no more monthly payments, and you have complete control over how and when it’s used. Many farmers appreciate the stability of ownership, especially when they expect to use a piece of machinery heavily for many years.

Buying can also provide potential tax benefits, such as deductions for depreciation and interest expenses, and over time, it can be less expensive than leasing if you keep the equipment in good working condition. This option works best when you have the capital, or financing, to support the purchase, and when you know the equipment will remain valuable and relevant to your operation well into the future.

Leasing Equipment

Leasing equipment offers flexibility and a lower upfront cost compared to buying. Instead of making one large purchase, you make fixed monthly payments for a set term, often with little or no down payment. This approach can be appealing if you want to preserve your cash flow or other needs or if your equipment requirements change frequently based on crop cycles, seasons, or market conditions.

Another advantage of leasing is the ability to upgrade to newer models more frequently, keeping up with the latest technology and efficiency improvements. In some cases, leases also include maintenance or warranty coverage, which can reduce repair expenses. Leasing works well for operations that prioritize flexibility, need predictable payments, and want to minimize the risk of owning outdated machinery.

Key Factors to Consider Before Deciding

Before you choose between buying and leasing, think about:

• Usage: Will the equipment be in use year-round or only seasonally?
• Cash Flow: Do you have the funds for a down payment, or would you rather keep cash available for other needs?
• Technology Needs: Is it important to have the latest features and efficiency upgrades?
• Long-Term Plans: Will this piece of equipment still meet your needs 5-10 years from now?
• Tax Implications: Work with your accountant to understand the tax benefits of each option.

There’s no one-size-fits-all answer to the buy vs. lease question. The right choice depends on your farm’s budget, equipment needs, and operational goals. In some cases, farmers even mix the two approaches, buying certain pieces for the long haul and leasing others for flexibility.

If you’re ready to take the next step in securing the equipment your operation needs, our Equipment Financing program is designed with farmers like you in mind. Whether you’re looking to buy or lease, we offer flexible structures, fixed-rate options, and customizable terms that fit your unique goals. From tractors and specialty equipment to trucks, trailers, and vehicles, we make the process quick, straightforward, and penalty-free if you choose to pre-pay. Let us help you access the tools you need to grow your operation while maximizing financial efficiency, explore your financing options with us today.