Lease vs. Buy: Pros & Cons

[bigcut]

There's alot on the forum regarding purchase of tractors and implements. I got to thinking, is leasing a tractor a viable way to go. Can someone smarter than me comment on the merits or drawbacks to leasing, assuming that is a viable way to go.

Welcome all thoughts & comments.
John

 

[majorwager]

Not a common occurrence for the majority SCUTS, CUTS, and light utility tractors on TBN. The attraction is the tax advantage, typically requires a business environment, 100 percent wtite-off. Enables newer warranted equipment in the production stream, minus the residual values present w/ ownership.

Current direct competition w/ leasing is the accelerated short term FULL depreciation for all new business related equipment, encompassed in the current revised tax legislation. The old adage still applies, the business must be profitable or write-offs are moot.


Short answer, most TBN folks would NOT find a lease beneficial. Some large AG equipment is leased, sometimes leased to own, w/ a small buy out at lease end, I have done this in my past. Accelerated depreciation became a better business option.


Most TBN folks seem to explore the zero financing and FORGO the advantage of a cash discount. There will be disagreement here, but facts do NOT deceive, and free lunches NEVER did actually exist, IN the end, someone paid the tab.

I will concede, that Kubota does NOT Seem to penalize consumers for utilizing their finance option, but the inherent profit margin for Kubota products is "baked -in", and protected even with the typical discount from list.

 

[bigcut]

Not a common occurrence for the majority SCUTS, CUTS, and light utility tractors on TBN. The attraction is the tax advantage, typically requires a business environment, 100 percent wtite-off. Enables newer warranted equipment in the production stream, minus the residual values present w/ ownership.

Current direct competition w/ leasing is the accelerated short term FULL depreciation for all new business related equipment, encompassed in the current revised tax legislation. The old adage still applies, the business must be profitable or write-offs are moot.


Short answer, most TBN folks would NOT find a lease beneficial. Some large AG equipment is leased, sometimes leased to own, w/ a small buy out at lease end, I have done this in my past. Accelerated depreciation became a better business option.


Most TBN folks seem to explore the zero financing and FORGO the advantage of a cash discount. There will be disagreement here, but facts do NOT deceive, and free lunches NEVER did actually exist, IN the end, someone paid the tab.

I will concede, that Kubota does NOT Seem to penalize consumers for utilizing their finance option, but the inherent profit margin for Kubota products is "baked -in", and protected even with the typical discount from list.

Major, you sure know your in's and out's regarding finance.....I got to thinking that a lease enables one to obtain (if offered by dealer/mfg.) the use of the tractor and not have to deal with the task of selling at the end of the lease. Then re-assess your personal situation as to your future needs.

Before I retired, I use to lease all our vehicles and some of our neighbors do the same, even though they/we are not business owners. At lease end, I just walked away, but, usually leased another vehicle that was a later model and still covered by the new warranty. It was a way of conserving cash with the opportunity to reanalyze things at lease termination. In the case of tractors, it could allow someone to downsize if they've finished their tasks. Or, they could change brands. But, you know all that.

I was just curious if others were using leasing as a pathway to finance their tractors. Thank you for you comments.
John