# Leasing?



## Vol (Jul 5, 2009)

From DTN/Progressive Farmer

Regards, Mike

https://www.dtnpf.com/agriculture/web/ag/news/business-inputs/article/2016/05/20/lease


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## Teslan (Aug 20, 2011)

To me it seems like the real only advantage to leasing is if you are leasing something without a trade. I kinda had a feeling the leasing thing wasn't as simple as it sounds.


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## swmnhay (Jun 13, 2008)

And at the end of the lease you have nothing.


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## swmnhay (Jun 13, 2008)

Some leases have a buyout on the end that is determined when you sign the lease and others you would just let it go back at end of lease.

Soooo,A trade in on a lease could be just giveing any equity away that you now have.

A story that has always stuck in my mind about a friend of a friend.The guy goes into trade off his lightly used Cadillac.Ends up trading it in on a a leased one.Payments so much a month for 4? Yrs.At the end he is to just let go back.Any how after he does the deal he says to my friend"I understand the payments and that I let it go back on the end.But what happened to my old car?"

So many people only look at what monthly payments are,not the whole picture!!


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## RuttedField (Apr 24, 2016)

I never got into a lease because it seems to me I am giving up my bargaining power. In a lease, I am told what I am going to pay for the machine, then in the end, I am told what I am going to get for a "trade in value" of it so to speak. This applies if I buy it for myself or let it go back.

With a true purchase, if I dislike what the trade in value is, I can sell it to a private buyer, go to another dealer, auction it, etc. the point is, the choice is mine, and I really like having options in a world so wrought on taking so many rights away in all areas of life.

Disclaimer: Just my opinion, and I do not make the purchases that many on here do that start with fractions and ends in millions; as in 1/2 million dollar combines. I know in farming sometimes you must do what you have to do to get by, and leases are one such way. My hat is off to those who take on such payments, feed the county and make it pay.


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## somedevildawg (Jun 20, 2011)

I didn't look at the article, but the advantages to leasing are numerous......unfortunately the cons are numerous as well. But basically they are stating up front what the vehicle, tractor, etc. will be worth in x amount of years with x amount of hours/miles and NO damage.....the balance is what is financed over the term of the contract.

Depends on what fits into your situation.......


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## Teslan (Aug 20, 2011)

somedevildawg said:


> I didn't look at the article, but the advantages to leasing are numerous......unfortunately the cons are numerous as well. But basically they are stating up front what the vehicle, tractor, etc. will be worth in x amount of years with x amount of hours/miles and NO damage.....the balance is what is financed over the term of the contract.
> 
> Depends on what fits into your situation.......


the point of the article is that you have to becareful of the kind of lease it is if you trade something in that had been depreciated out because you suddenly might be on hook hook with the IRS because depending on the lease it is like you sold your trade in. I am doing a lease on my pole barn. But it has the residual payment at the end which is the same as my payment. And for the next few years I take off that lease payment as a full expense. Then I can depreciate that last payment. It seems machinery is trickier to get into the right lease. More care needs to be taken.


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## gearhartfarms82 (May 10, 2015)

Leases are not all bad. We do them some. Way cheaper in long run if you use ur equipment. Its all in what u do for your own operation.


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## Vol (Jul 5, 2009)

Here is a different type of leasing......called sharing....at a price.

Regards, Mike

https://www.dtnpf.com/agriculture/web/ag/news/article/2016/05/26/service-matches-equipment-owners


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## mlappin (Jun 25, 2009)

Leasing does have it's advantages I'm sure, but some also distinct disadvantages, the last might be just Indiana.

1: You're paying to use it, but you can't count the as an asset and borrow against it.

2: You can't depreciate something that's leased.

3: In Indiana you can't get away from property taxes, if you lease a brand new combine, you have to pay property taxes on it because you still have use of it just like you owned it. Smaller items not so much, but big ticket items like tractors, combines, etc the county seat is going to screw you one way or another. They figure this the same way they want us to report every single internet purchase from out of state, even magazine subscriptions, I think they call it a use tax instead of a sales tax.


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## Teslan (Aug 20, 2011)

mlappin said:


> Leasing does have it's advantages I'm sure, but some also distinct disadvantages, the last might be just Indiana.
> 
> 1: You're paying to use it, but you can't count the as an asset and borrow against it.
> 
> ...


Though you can deduct the lease payments. Then if you buy it in the end start depreciation then. If you have to get a loan for the equipment you can't borrow against it anyways. As for your Indiana use tax. That just sucks. I wonder if that has hurt sales of new equipment in Indiana. I sure would hate to pay taxes on the equipment we own. I sure hope some politician doesn't revive that here in Colorado.


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## deadmoose (Oct 30, 2011)

Vol said:


> Here is a different type of leasing......called sharing....at a price.
> 
> Regards, Mike
> 
> https://www.dtnpf.com/agriculture/web/ag/news/article/2016/05/26/service-matches-equipment-owners


I have no doubt that will work extremely well for some owners and renters.

And horrible for others.


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## JD3430 (Jan 1, 2012)

gearhartfarms82 said:


> Leases are not all bad. We do them some. Way cheaper in long run if you use ur equipment. Its all in what u do for your own operation.


Me, too. So far so good. My residual is very small-about 1/4-1/3rd of remaining value and should be easy to handle.


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## mlappin (Jun 25, 2009)

Teslan said:


> Though you can deduct the lease payments. Then if you buy it in the end start depreciation then. If you have to get a loan for the equipment you can't borrow against it anyways. As for your Indiana use tax. That just sucks. I wonder if that has hurt sales of new equipment in Indiana. I sure would hate to pay taxes on the equipment we own. I sure hope some politician doesn't revive that here in Colorado.


Thats Indiana, pretty good in some ways and completely ass backwards in others.

Homeowners are charged property taxes at 1% of assessed value, companies at 2% and farmers 3%.

Supposedly a bill has been passed to help relieve the tax burden on the farmers of the state, damn counties will just figure a way around it or jack our assessments way up.


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