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Equipment lease contract numbers consistent, but for different reasons

An ag lender says equipment leasing has become more common.

Greg Roberg is with Ag Direct, a partner with many Farm Credit lenders for major equipment financing, and he tells Brownfield, “Our leasing business is about, just shy of 20% of all of our business, so purchases of new and used equipment is still predominantly the way at least Ag Direct is financing equipment now.”

Roberg says leasing new machinery jumped when commodity prices were still strong. “It doubled largely in that 2011-2012 time frame when farm incomes were high because producers were looking for a way to quite frankly, manage their tax liability.”

Now, Roberg says leasing is popular for some farmers, but for different reasons. “Our leasing business has stayed steady but largely for a different reason, and that’s cash flow. Leasing typically allows the producer to have a lower payment because you have a residual at the end, so the structure of a lease is you’re paying for what you use.”

Roberg says farmers should look at where their operation will be financially three to four years down the road when considering new equipment and be careful to compare the different types of both lease-to-own and walk-away leases from lenders and manufacturers before deciding.

Ag Direct is a partner with several Farm Credit lending agencies.