These are rather ad hoc and for many farmers maintaining the costs of the essential machinery is always a dream to achieve. Cropping equipment, especially of haying equipment such as mowers, balers, tedders and rakes, may be a large investment. In this regard, leasing stands as a practical approach for those who wish to keep going with their production without a strong one-off cost discouragement. Let’s in this guide discuss the benefits of approaching haying equipment leasing, the available options and strategies on how to identify the most suitable one to approach.
Why Consider Leasing Haying Equipment?
Haying equipment can therefore be leased to allow for reduced costs compared to purchase as well as other benefits. Here are a few key benefits:
Lower Initial Costs
The acquisition of haying equipment is capital-intensive, usually consuming a large percentage of the income of the farm, especially for the relatively small scale enterprises. Leasing on the other hand enables one to purchase equipment that would have been very expensive, save on cash for other needs in the farm.
Access to the Latest Technology
Agricultural implement technology evolves rapidly with innovational features frequently being added to existing implements. Leasing can be defined to afford farmers a chance to use modern haying equipment after which they don’t have to buy them. At the expiry of lease agreement, new models of different types of machinery needed for the operations of your farm can be acquired hence making them up to date.
Reduced Maintenance and Repair Costs
It is legal to have some lease agreements incorporate maintenance and repair services in the lease agreement to do it on your behalf. This is especially useful for haying equipment as it may deteriorate due to the work given for various seasons.
Flexibility for Seasonal Needs
Since haying is done during some particular time of year, it will not be economically feasible for some of the farming intents to invest in equipment that can only be used for a limited time only. Leasing, for instance, guarantees the use of machinery only where and when it is required; therefore, this mode of acquisition goes with minimal costs of storing and maintaining machinery that may only be used some time in the future.
Tax Benefits
Sometimes, leasing can be especially beneficial from a tax point of view because the payments for leasing reflect operational costs. It is advisable to seek professional advice from one of the tax consultants regarding the effects of equipment leasing for your individual or organizational tax condition.
Types of Haying Equipment Leasing Options
In today’s market there are many forms of leases which could be offered to meet the needs and finances of the farm. Here’s a look at the main options:
Operating Lease
An operating lease makes the most amount of sense to those who only require equipment sporadically, though for its users, it is most often during the haying season. The leases of these assets are of comparably shorter durations and facilitate upgrades at the end of useful lives. At the end of the term, it is taken back by the leasing company so you do not have to worry about where to store it or how it is going to lose its value.
Capital Lease
The capital lease finance lease is appropriate for users who require the plant and equipment at the end of the lease. Though, the monthly payment is higher than an operating lease, you are gradually paying for the equipment, and you will own the equipment at some point. This can be recommended for farmers who are in need of a lasting solution but do not wish to make a raw buy.
Seasonal Lease
Seasonal leases work well within the agricultural sector since income changes from time to time depending on production. Most farming activities have a specific period, called seasons, and therefore paying rent in a similar manner can be manageable in terms of cash flow. Such leases are typically for a brief period, though they may be extended annually.
Deferred Payment Lease
Most of the leasing companies make contracts that enable farmers to pay later or bring forward the amount of payment to another date. It can be of great advantage for farms that require equipment urgently at a time that they lack adequate funds for initial payments.
Tips for Choosing the Best Leasing Option
When selecting a lease, consider the following tips to ensure you’re choosing the best option for your operation:
Assess Your Farm’s Needs
Consider how long you will use the rented equipment and how frequently, it will be used throughout a specific term period. If haying is seasonal requirement, a short-term lease may best suit a farmer’s needs. However, for longer usage, it is possible to benefit from a capital lease.
Compare Leasing Companies
While, every leasing company is not the same; they may offer different terms, fees and the coverage offered for maintenance. Choose several companies, compare the contracts and read customer testimonials on the proposed lease service provider.
Check for Hidden Fees
It will be advisable to peruse the leasing document to look for extra charges including maintenance fees or early returns. This will help familiarize yourself with these fees so that you do not end up overlooked on other unwanted charges.
Consider the Cost of Upgrades
Special consideration may be put in occasional equipment replacement within the lease. If keeping up to date with technology is critical for your business, ensure that you find a leasing package that permits you to upgrade your machinery at the end of each lease period at no extra cost.
Usage of Lease Term and Conditions
It’s important that the term of the lease coincide with your haying schedule. Moreover, mention the guidelines for returning the equipment or buying them at lease termination. Knowledge of these details can go a long way in avoiding problems once your lease has run out.
Final Thoughts
Since leasing haying equipment is not usually possible at the start of every haying season, farmers can opt to purchase the equipment since this is cheaper and flexible option than purchasing the equipment outright. Each of these leases has its own unique characteristics and by determining the kind of lease that best suits your farm you can easily identify a leasing solution that optimizes production for the farm while at the same time conserving resources.