# Buy used or lease new ?



## siscofarms (Nov 23, 2010)

Just wondering thoughts on the typical 100hp hay tractor . Used is going to be $20000 on up for decent and what you want and from what I can find in my limited investigation of this $10000 a year for lease of brand new warranty and all . SOOOOO ?????????


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## RockmartGA (Jun 29, 2011)

So many factors to consider. I'm more of a "run it til the wheels fall off" type of guy, but if I were a larger commercial operation, one thing that might push me toward leasing tractors is the increasing complexity (cvt transmissions, electronics, emissions systems) of the newer tractors.

Some of us still run 30-50 year old equipment. I don't see that happening years from now as much of this new equipment has become "disposable".


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## mlappin (Jun 25, 2009)

Here if you lease an expensive enough piece of equipment you still get to pay personal property tax on it but don't get to use it as equity, so might as well own.

But&#8230;my county is stupid, they placed a business inventory tax in place after the state did away with it. Then the brain surgeons on the county council keep coming up with all kinds of new tax incentives to get business to come to our county instead of the surrounding counties that DON'T have a inventory tax...


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## SVFHAY (Dec 5, 2008)

How many hours do you put on a year?


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## Trillium Farm (Dec 18, 2014)

If you can buy something before technology went amok Buy as long as it it is in good condition $20K vs $10K a year for leasing to me is a no brainer, but there is another factor to consider, if your implements are the new techno loaded ones you may have no choice, but to get new.


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## BWfarms (Aug 3, 2015)

I will fork over $40,000 for a used tractor and hope I get 5 years out of it. That still beats a 10k yearly lease and you will still need something on year 6. You can always sell a used tractor showing problems for less than you paid and still be ahead.

My logic doesn't apply to others but I went from buying a new tractor in 2012 to buying used in 2017. I still own the tractor I bought new in 2012.

Now if I was running a large and highly intensive cropping operation i.e. 2 plantings a year with 2 harvests, I would likely lease as I couldn't afford downtime.


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## Gearclash (Nov 25, 2010)

I haven't seen very many (or any?) cases where leasing pays in the long run. To really have a fair comparison you would have to compare leasing to buying new. Every time I put the pencil to it, the cost of depreciation plus repairs on used is always less that what depreciation is for quite a while on new. You would want to compare what depreciation + repairs + your annual payment is on used vs lease payment. And keep in mind you get zero equity out of a lease, not that machinery is a great way to build equity but it needs to be considered.


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## siscofarms (Nov 23, 2010)

I would probably put close to the 300hrs a year on it . Im not a big commercial operation , cow calf and I do sell some hay . 5000 rolls a year total . And to answer the other question , I have run my 1486 into the ground . I rebuilt a 1066 , finished it last year , and after that project , rebuild of everything , I cant see putting the money and effort into the old stuff , as much as I love it . 1486 is a engine out of frame rebuild , including head and pump work . rear is tight but hyd are weak so money there . Then it needs tires . just not dollaring out and still have a old tractor . Versus the fact , I like the tech on new tractors but its not built to last . Lease for 3 yrs and turn it in for another one . About as far as Id trust them anyway . Now days a mouse chews on the wrong wire your screwed . Im a red guy so I have looked at magnums 7110 ,20s . But unless they are worn plum out there 40k , and used needing tires or something . Havent ruled something like that out but the new tractor with mfd and loader with a warranty that I wont have to fix anything if something did go wrong actually pencils better than the 40k used one . Especially with the new tax formats .


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## haybaler101 (Nov 30, 2008)

I know the JD dealers in southern Indiana and western Kentucky are always advertising their lease offers on new and slightly used tractors. Has looked very enticing to me. 125-150 hp tractors with loaders leasing for 3 yrs/300 hrs/yr for $12-15k. You can’t touch a new tractor financing for that and you run the crap out of them and get a new one in 3 years.


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## JD3430 (Jan 1, 2012)

Coming from another perspective:

Admittedly not the worlds greatest wrench turner, but I do what I'm capable of. Ordinary maintenance and basic repairs.

I've bought 7 tractors over last 10 years. 3 have been disappointing. Problems that could not be detected during "test drive". Even paid "experts" check them over and they missed plenty of issues. I understand even the most thorough examination of machinery can still miss things. One thing I have learned over the years is a majority of equipment, trucks, tractors, etc is being sold because there is a repair needed hidden or unhidden, or there is a lot of pending maintenance about to be needed and the current owner cant make it pencil out.

From the perspective that you present, I would say base your decision on how much "sweat equity" you want to put into a used tractor.

If you're trying to avoid that type of work and the delays associated with it, buy a leased tractor and get a good barn cat to kill the wire-chewing mice.

If you don't mind turning wrenches and the associated expenses and delays that comes with downtime, buy used.

I leased ONE tractor and it was a very good experience. I paid it off early- 4 years into a 6 year lease. Regrettably, I have probably $20,000 + in repairs to used tractors. 1 pump replacement, 1 set of brakes, 1 king pin front axle repair, 1 cardan brake replacement and some other smaller repairs I couldn't do.

Dont forget when you buy used, I'm pretty sure you'll have ~$1,000 in transmission fluid, hydraulic fluid, axle fluids, engine oil, anti freeze and all the filters associated with them. Batteries, too if shes been sitting a while.

Anymore, I just figure adding about $5,000 to the price of a 100-150HP tractor for 1st year fixes that always seem to be necessary. May seem extreme, but at least you're covered.

Lastly, dont forget the "happiness with life" factor. I know were all supposed to do without, but at my age, I want to enjoy my remaining years. Personally, I find repairing to become more difficult as the years go by. Life is short. Do what helps you enjoy your life. No sense going home worried, tired angry every night. Remember- "you cant take it with you". As long as you're not foolish with money, its OK to have a few nice things in life.


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## SVFHAY (Dec 5, 2008)

I've always thought it was silly to lease anything with wheels. Dave Ramsey calls them a fleece, as in say goodbye to your money.

I am starting to change my opinion though. In a year or so I may consider a tractor lease.

If you have the ability to put that machine to work at a job that takes advantage of the productivity new ones offer and can get it close to the limit in hours allowed under lease terms it may work well. Especially if you can utilize the tax advantages. Don't go over the hours though, some of the peneltys add up quickly.


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## carcajou (Jan 28, 2011)

I would not buy a chore tractor that was out on a lease after looking at some lately. The ones i saw were run and not maintained, bolts missing, manure everywhere even half way up between the rads etc. I guess they figure if they are getting a new one every two years why bother. Dealer will clean them up after and how would one know?


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## haybaler101 (Nov 30, 2008)

carcajou said:


> I would not buy a chore tractor that was out on a lease after looking at some lately. The ones i saw were run and not maintained, bolts missing, manure everywhere even half way up between the rads etc. I guess they figure if they are getting a new one every two years why bother. Dealer will clean them up after and how would one know?


Lease 'em, don't grease 'em!


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## Gearclash (Nov 25, 2010)

Yup. Local dealer quit doing business with a big dairy over that. Leased skid steers and did zero maintainance.


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## Palmettokat (Jul 10, 2017)

Talk with your tax advisory on which is best for you. Lease is written off the year it is paid where buying is spread over time, not sure the number of years now. Be sure to compare the property taxes and insurance required. I lease copier for my office and it being leased my taxes cost me more the maintenance is in the lease and taxes are based upon the total of the lease, not just cost of the machine which is what I would be taxed if I owned it.

Some very good advice has been given. I leased first tractor and that went well and leased one car and ended up being good for me for it did not hold the value it was expected to. Just read the lease carefully and know penalty for going over the hours and if you can buy it at end of lease and how the price is determined. Have friend who sells commercial trucks and he has told me over and over no way can you buy for as low of cost as leasing when you compare all the numbers.

Will the more modern tractor make your more efficient or safer or better work environment?

As to Dave Ramsey, I was a ELP with them for couple or so of years. He gives some great advice but it is not all "right" for any one person. He is talking to the masses. We are each an individual and our situation is not like anyone else. He does or did not recommended owning your business property for you often need to move. Do you own your barns? I think he really pushes stay within your means and think before you enter any agreement.


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## endrow (Dec 15, 2011)

Back in the late 90,s leased a AgcoAllis 8785 ,directly from agco . We bought a sunflower drill and used it to pull it . The custom notill buissnes was on fire and we wanted to cash in on it . 3 year lease was 18% of the msrp in 36 payments . The tractor had to go back to them in 3 years . The opportunity came up because agco wanted to get tractors out . They gave you plenty of hours no problem there . Agco was fussy they wanted the tractor maintained and taken care of very well . I agree leasing is usually not a good deal


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## JD3430 (Jan 1, 2012)

Don’t know the differences between trucks and tractors leases, but I see so many more leased trucks now.


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## endrow (Dec 15, 2011)

Makes a difference couple years ago dad said did you see in the paper who selling out then along the shore it was a big green farmer, he was retiring having a normal auction and there was a 1020 head on it. As I looked over the auction Advertiser. I was kind of confused none of the big newer tractors none of the combines or grain carts or that big corn planter. Just as old 4430s and it's grain trucks just the old stuff. I called our John Deere salesman and asked him why that was he said oh he leased all that stuff and it went back


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## swmnhay (Jun 13, 2008)

endrow said:


> Makes a difference couple years ago dad said did you see in the paper who selling out then along the shore it was a big green farmer, he was retiring having a normal auction and there was a 1020 head on it. As I looked over the auction Advertiser. I was kind of confused none of the big newer tractors none of the combines or grain carts or that big corn planter. Just as old 4430s and it's grain trucks just the old stuff. I called our John Deere salesman and asked him why that was he said oh he leased all that stuff and it went back


leasing and BTO's kinda creates a vicious cycle.They May have a tractor leased and allowed 600 hrs a yr but only using 400 so they think they need to rent more ground to utilize the other 200 hrs so they bid up ground paying extra to get it to utilize the hrs on the lease.

I've done one lease to own on a tractor only because the the lease plus buyout was less then what the banks interest and payments were.

You always here the statement the leased is deductible,so is buying it so it's a mute point.Buying it you can also write it off sooner if need be with sec 179.


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## siscofarms (Nov 23, 2010)

Not getting rid of old stuff and I really do have to check into this a lot better , But if this lease thing is as advertised I will probably get one and atleast try it . The fact of hook and go and not have to worry is a good thing and comfort is also a thing as time in the field is limited any more . I would mow with a 9' NH disc mower and pull the round baler with it . probably gather and load hay in the field also depending on how hours are going . Ted and rake with the 1066 . Im mostly a one man show so why not , as mentioned before , live it up , AND ,,,it just pencils out better for me .


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## Palmettokat (Jul 10, 2017)

Have friend who sells commercial trucks and he has told me over and over no way can you buy for as low of cost as leasing when you compare all the numbers.

Want to reference back to one reason he liked their lease, you could lease with higher mileage than expected and the lease dollar payment was based upon the higher mileage and they would refund the overage amount when turned it. (Hope that made sense.) The best I remember the refund came back to the "person" and somehow it did not come into consideration in taxes. Please, no idea how that worked but it was a Chevy dealership who have bought from but has great reputation.

My best advice, be sure you ask for all options with the lease and let them explain them and then be sure you understand and they work for you. One other question, is there any kind of option you would want to add that could be an issue if leased? If I were looking at leasing would want to know the buying it at end and how that works outs long term. That can give you the option to walk away if it proves not to be what you want or reliable or if it does not hold but if all suits you allows you to buy it at good price IF the lease allows it.


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## IH 1586 (Oct 16, 2014)

Have thought about leasing though not seriously. I know my thoughts were it would become the main tractor to make the most out of it and would want it set up with a loader for that reason. Ads always sound good BUT what is the fine print that you never see and something else that came to mind recently with this topic, a breakdown, do you get a credit of some form if its down and based on my shops in this area, that could easily be weeks. I tried to get replacement baler when they were trying to fix mine under warranty and they weren't willing to let me use one new or used.


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## JD3430 (Jan 1, 2012)

IH 1586 said:


> Have thought about leasing though not seriously. I know my thoughts were it would become the main tractor to make the most out of it and would want it set up with a loader for that reason. Ads always sound good BUT what is the fine print that you never see and something else that came to mind recently with this topic, a breakdown, do you get a credit of some form if its down and based on my shops in this area, that could easily be weeks. I tried to get replacement baler when they were trying to fix mine under warranty and they weren't willing to let me use one new or used.


I would be pretty sure the answer is "no", but I'm not 100% sure. The leasing company I used for the one I leased in PA had zero to do with equipment. They only provided the financing. Would think the only ones who could do that would be the manufacturer and the dealer working together on like a "Case-IH lease" and the lease would probably cost more. I think the probability of a new tractor breaking down is very low, so I wouldn't worry much about it. Much greater likelihood an older high housed tractor will break down. Sure, Accidents can happen with any hours tractor. In fact, my leased tractor had a broken cab roof and broken window glass. 
I remember my residual being very reasonable, so the buyout in the end was just about exactly what it would have been worth.
I didn't have any problems with my one leasing experience and would recommend to anyone. Just look at the residual value at the end and see if the buyout makes sense. I remember my leasing company even offered to finance the residual if you wanted to make payments on it !!!
By then youll know the tractor very well and know if it is a "keeper".
If I remember correctly, I paid $775/mo on a 7 year lease. I think the tractor new was $85,000???? So if I did "normal" purchase payments it would have been more like $1,100/mo +/-.
I'm pretty much broke all the time so it was a no-brained for me. I'm sure all the accountant-types like Dave Ramsey will tell me how guilty I should feel and how I destroyed my children's future and all that_______, but I'm confident I did the right thing. I ended up just buying the tractor out early because Inwanted to own it. That's the one little thing I didn't like....you don't feel like you "own" the tractor-that's because you don't. You're "renting" it with an option to buy at the end. When you do a traditional financing, you own the tractor, with a promise to make payments. With a lease, they own the tractor and you rent it from them.
The leasing company had outstanding service and I wouldn't hesitate to do it again. I feel like the money I saved each month got me into another piece of equipment I wouldn't have been able to afford. Farming is a tough business. Let's say I was a landscaper: I could buy one truck, a trailer, and related small tools. To get bigger, I can buy a second truck, same tools and higher an employee, etc. However, it's a low cost start up business. 
With farming, you need a large number of pieces of equipment right out of the chute, just to be able to make hay. So the up front investment is enormous just to make 1 bale of hay. I always thought it best to keep expenses low in the beginning just to survive the first 5+years, then see if you can keep going.


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