Home Online Banking The Association Products/Services Ag Links
 
Weather |  Futures |  Quotes |  Portfolio |  Cotton News |  Grain |  Rice News |  Soybeans News |  Livestock |  Market News 

 

 

WHAT ARE MY OPTIONS?

WHAT IS LEASING?
Tax oriented lease: A "True" lease for income tax purposes, lessor claims the depreciation
benefits, lessee entitled to deduct the rental payments.

Harvest Payments: Equipment may be acquired when needed and payments delayed until
cash is available. The features that distinguish a Harvest payment lease are:

  • Payment delay period of 1-6 months.
  • A 10% advance rental is due at the time equipment is placed in service. Only annual
    or semi-annual payment intervals are available.

Lease Purchase: This option is not a "True" lease and the lessee is the owner for federal income tax purposes. Lease purchase offers advantages not available with other lease
structures:

  • Bargain purchase options.
  • Lease terms that are longer or shorter than those allowed under true lease programs.
  • A trade-in or down-payment may be used to reduce the amount financed.

 

Leasing is rapidly growing alternative to purchasing new and used equipment, vehicles and facilities. Virtually any type of agricultural equipment and many types of facilities may be
leased.

      

WHAT ARE THE BENEFITS OF LEASING?
  Conserving working capital: Customers can acquire equipment without a large down-payment or stock purchase. This allows customers to keep working capital available for more important uses. Periodic lease payments are often lower than debt service payments of
purchased equipment.

Improving cash flow: Lease payments can be matched to seasonal cash flow cycles. The
lease payments can be matched to the use of the equipment.

Tax benefits: In many cases, leasing can be structured so payments are 100% tax-deductible. Leasing may reverse the negative effect of the mid-quarter depreciation convention, a penalty assessed if too much equipment is purchased in the last 3 months
of the business year. Leasing also can eliminate or lessen the impact of the Alternative
Minimum Tax (AMT).

Convert value of owned equipment to cash: Customers can sell their equipment and
lease it back. This allows some customers to draw equity from their equipment and reinvest
the cash in more productive areas of their business.

Alternative financing source: Leasing may be used to finance needed equipment when it
is impractical to disturb existing loan agreements.

Key Benefits:

  • No limit on transaction size.
  • Equipment may be new or used; the customer may choose the equipment dealer and negotiate the price.
  • Lease rates are fixed for the entire term.
  • Payments may be made monthly, quarterly, semi-annually or annually.
  • Lease terms range generally from 3-7 years.
  • At the end of the lease term, the customer has the option of purchasing the equipment, renewing the lease or returning the equipment.
  • Fixed purchase options are available.