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Is Farm Equipment Leasing Right For Your Alberta Farm?

You’re ready to build your dream farm in Alberta. One important question looms: how will you get the equipment you need? Farm equipment leasing in Alberta offers a compelling alternative to traditional ownership, providing potential benefits for both your budget and your peace of mind.

Let’s delve into the key factors that can help you decide if leasing is the right choice for your Alberta farm. There are advantages and considerations to keep in mind – let’s explore them together!

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The Pros And Cons Of Leasing Farm Equipment

A large orange combine harvester with a wide cutter bar harvests a golden field of wheat on a sunny day.

Farm equipment is essential for any agricultural operation, but the costs can be substantial. For many farmers in Alberta, farm equipment leasing is an attractive alternative to buying. Leasing offers some significant benefits, especially in the short term, but it also comes with drawbacks you’ll want to consider:

Cash Flow Benefits

One of the biggest advantages of leasing farm equipment is improved cash flow. Leasing typically requires a small down payment and lower monthly payments than purchasing the same equipment outright. This frees up capital that can be used for other essentials like seeds, fertilizer, and land payments. Farm equipment leasing can be a particularly flexible option if money is tight or you want to conserve resources.

Access To Newer Equipment

Leasing provides farmers with instant access to advanced equipment that might otherwise be unaffordable to purchase. Newer equipment is often more efficient, reliable, and technologically advanced, which can help increase productivity and crop yields. For time-sensitive tasks like harvesting or seeding, having the latest equipment is crucial.

Ongoing Costs

While farm equipment leasing seems appealing in the short run, the costs don’t disappear. Lease payments must be made for the life of the lease, and they often come with interest charges. If you continue to lease new equipment year after year, the payments never truly end. Over the lifetime of a piece of equipment, leasing may ultimately cost more than buying outright.

Less Control

Another downside of leasing is the lack of control and flexibility. Leased equipment typically can’t be modified or repaired without permission from the dealer. You may face penalties if you break the terms of the lease agreement. Once the lease is up, the equipment must be returned, which means finding new equipment to lease or buy.

For Alberta farmers, the decision to buy or lease equipment depends on your operation’s needs, financial situation, and long-term goals. Evaluate all the pros and cons to determine what will benefit your farm the most. With proper planning, either option can be part of a sustainable equipment management strategy.

Key Factors To Consider When Deciding On Farm Equipment Leasing Or Buying In Alberta

Red tractor pulls a wooden wagon overflowing with hay across a green field under a blue sky.

Leasing farm equipment in Alberta can be a smart solution for managing costs, ensuring reliability, and navigating tax implications. However, it’s crucial to weigh the pros and cons carefully before making this important decision. Here’s a breakdown of the key factors to consider:

Cost And Cash Flow

Farm equipment leasing offers farmers lower upfront costs and often lower monthly payments than buying outright. If cash flow is tight, leasing can be appealing since you’re not dropping a huge amount of capital to own the equipment. However, lease payments are ongoing and can impact your budget for years. Review the terms of any lease carefully to understand your total financial obligation before signing.

Reliability And Dealer Support

For critical equipment needed during planting or harvest, leasing ensures you have a reliable machine and dealer support when you need it most. Dealers typically handle or assist with repairs to leased equipment, reducing downtime. If a machine goes down during a crucial time, your dealer will work to get you back up and running as quickly as possible. Some leases also come with warranties for additional peace of mind.

Tax Considerations

There are tax benefits to both buying and leasing equipment. Purchasing allows you to deduct the entire cost of the equipment over its useful life. Farm equipment leasing also provides tax deductions for the annual payments. The tax implications can be complicated, so talk to your accountant about which option is better for your operation based on your income and tax bracket.

Risk

With leasing, the risk of equipment failure or obsolescence sits more with the dealer. If a leased machine breaks down or technology changes, you can often upgrade to a new lease on updated equipment. However, leasing ties up capital that could be used for other parts of your operation. There is also a risk that lease terms may become less favorable over time.
Owning equipment outright means taking on the risk that it could significantly decrease in value or need major repairs. However, ownership also provides stability without ongoing payments or uncertainty about future lease terms. For many farmers, the familiarity and security of ownership outweigh the risks.

In the end, the choice between buying or leasing farm equipment in Alberta comes down to your operation’s financial situation, risk tolerance, and equipment needs. Evaluate all the factors carefully and determine what will benefit your farm most in the long run.

Additional Resources For Alberta Farmers

When considering farm equipment leasing, there’s a wealth of reliable information at your fingertips. Here are key resources to help you make informed decisions:

Agriculture Financial Services Corporation (AFSC): Explore financing options, insurance programs, and other support services provided by the Alberta government through the AFSC.

Canadian Federation of Agriculture (CFA): Access industry-wide resources and advocacy efforts from this national organization https://www.cfa-fca.ca/.

Canada Revenue Agency (CRA): Dig into the tax implications of leasing versus buying farm equipment by searching the CRA website

Tips On How To Lease Farm Equipment

Several tractors are parked under a large white open-sided tent in a green field.

Leasing farm equipment can be a strategic financial move for Alberta farmers. It offers advantages like lower upfront costs, access to reliable equipment, and dealer support. However, it’s important to remember that leasing means ongoing payments and potentially less control over repairs and maintenance. Carefully consider the pros and cons before committing.

Look For Reputable Financing Companies

Partner with a financing company that specializes in farm equipment leasing. They understand the seasonal demands of farming and can provide flexible payment plans. Ask about their financing terms, interest rates, and what equipment brands they cover.

Determine What Equipment You Need

Make a list of the equipment critical to your operation during peak seasons. Things like tractors, combines, balers, and irrigation pivots are often good options to lease since they’re essential yet only used part of the year. Leasing ensures they’re in good working order when you need them most. For equipment used year-round, like grain carts or tillage tools, buying may make more financial sense in the long run.

Compare Leasing V.S. Buying Costs

Crunch the numbers to see which option is more budget-friendly for the equipment you need. Leasing usually means lower monthly payments but no equity is gained. Buying builds equity and ownership but often requires large down payments and interest charges. Calculate total costs over the lifetime of the equipment to determine what makes the most financial sense for your farm.

Discuss Responsibilities And Restrictions

Before signing any lease, understand all terms and conditions. Who is responsible for repairs, maintenance, insurance, and storage fees? Are there any restrictions on how much you can use the equipment or resell it? Make sure you can still operate efficiently with any constraints that come with farm equipment leasing.

Leasing farm equipment is a big decision, but following these tips can help ensure you find a financing option that fits both your budget and operational needs. By determining what’s critical, comparing costs, finding a reputable farm equipment leasing company, and understanding the fine print, you’ll be well on your way to securing reliable equipment for your farm.

Leasing: The Smart Way to Equip Your Alberta Farm

Salesman selling farm equipment to a male customer.

Building your dream Alberta farm requires the right equipment. Leasing offers a compelling solution that can transform how you manage your machinery and your budget. With lower upfront costs, access to the latest technology, and strong dealer support, leasing puts the tools you need within reach.

Discover the advantages of equipment leasing for your Alberta farm. Explore your options with reputable leasing companies and make the strategic choice to optimize your operation’s success!


Your search for the perfect Alberta farmland starts with Hansen Land Brokers. Let our skilled brokers guide you through the process and secure the property that aligns with your vision. Contact us today!

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