Leasing vs. Buying options

When it’s time to update, upgrade or replace equipment for your ag business, one of the many considerations other than new or used is often whether to buy or lease. Available cash flow, advice and even life of the equipment are key in making your decision. Buying can be cheaper over the life of the asset, but leasing can provide greater flexibility regarding the required down payment. This is a benefit if cash flow is tight or you are balancing multiple needs. Buying provides flexibility if altering machinery is needed or you intend on selling machinery. Leasing contracts may offer different options if keeping up to date with the latest tech and emissions is important to you and your operation. The final decision will be driven by what is most important to you. You know your business, you know what you value most. Here are some things to consider that may help in determining to buy or lease equipment: Assess your overall position. First, take a step back to plan your equipment needs and available resources. Get a clear picture of how the equipment will help you improve your operation, improve efficiency, boost your performance or allow for expansion. Also look at your financial, human resources and cash flow projections. Sometimes equipment can help to mitigate struggles in securing reliable labour. •How much can you afford to spend? •What is your capacity to maintain, repair and/or upgrade the equipment? Research your options Talk to your business advisor about leasing vs buying and consider the following: •the purchase price and down payment (if buying) •lease payments and end-of-lease purchase cost (if leasing) •tax implications •need for alterations •maintenance needs and potential down time •repair and upgrades Your business advisor can help you compare the numbers. With relevant and specific information in hand, you can compare your options and weigh what’s most important to your business to decide what’s right for you.