Farm Equipment Financing: Loan vs. Lease

Should I Take Out a Loan or Lease Farm Equipment?

Taking out a farm equipment loan to purchase or lease John Deere farm equipment both have their advantages. Consider the comparison below and contact a Koenig Equipment salesperson to help you make an informed decision on whether farm equipment leasing or financing is best for your operation.

Farm Equipment Loan vs. Lease Comparison

 LoanLease
PaymentsTerms and payment schedules can be customized to meet your needs.Options to pay less upfront and lower payments than a loan resulting in increased cash flow.
Tax ImplicationsEquipment is an asset and can be depreciated.You may be able to deduct your payment for taxes.
UsageNo limits to how much you use your equipment.Subject to annual hour restrictions.
OwnershipYou own the equipment when you’re done paying for it. Equity can be rolled over every 1-3 years, helping you trade in your tractor or combine for a new model.Right to return equipment or exercise a purchase option at the end of the lease.
FleetTendency to keep equipment in fleet too long, causing high repair costs.Keep your fleet newer with less downtime and the latest technology.

Equipment finance team at Koenig Equipment

Other questions to consider when leasing or financing farm equipment:

Is my operation stable, expanding, or downsizing?

If things are changing on your farm, you might not want to be locked into a long-term agricultural equipment loan.

What are the cash flow needs of my farm or business?

Farm equipment leasing offers shorter terms, lower payments, and generally requires less up-front cash than a loan increasing your cashflow.

How long do I need the equipment?

Leasing terms are flexible allowing you to only pay for equipment while you need it.

What is my advisor saying about my tax situation?

Payments on a farm equipment lease may be deductible for taxes.

With an agricultural equipment loan, follwoing the final payment you own the equipment which may let you reduce your tax burden through depreciation. Work with your accountant/tax advisor and your agricultural sales expert to determine what makes the most sense for your operation. It may even be a mix of traditional financing and leasing. 

Am I risk averse?

Leasing a new agricultural equipment is less risky than financing.

Is equipment ownership important to me?

With a lease, you don't own the equipment. However, Operating Leases do provide a purchase option at the end of the term. Find a Koenig Equipment location near you to learn more about the different options.

Is running the newest technology important to my operation?

Leasing provides an opportunity to run the newest equipment with the latest technology.

Is running equipment under warranty important to my operation?

Leases can often be combined with PowerGard™ Protection Plan coverage, which extends your warranty without increasing your payment.

How do I finance or lease farm equipment from Koenig Equipment?

Contact a Koenig Equipment sales professional today for a credit application. You will need a valid photo ID.