Irrigation Financing Through AgDirect®
An irrigation system is a major investment in your operation. Red Cedar Irrigation works with AgDirect® to help growers access financing options built specifically for agriculture.
Whether you’re looking to buy, lease or refinance an irrigation system, AgDirect offers ag-friendly terms, competitive financing options and a straightforward application process to help you move your project forward.
AgDirect financing options include:
- Buy, lease or refinance options
- Fixed or variable rates
- Financing terms up to 10 years on pivots
- Delayed payments up to 15 months
- No prepayment penalties on eligible financing
- As little as zero down on new pivots
- Financing for both new and used equipment
- Easy applications and quick credit decisions
AgDirect can also finance more than just the pivot itself. Eligible irrigation projects may include hard costs such as pivots, pumps, control panels, generators and remote control systems, as well as certain soft costs including underground pipe, wiring, concrete pads and well-related expenses.
Ready to explore your options?
Talk with the Red Cedar Irrigation team about your project and available financing options through AgDirect.
What types of equipment leases are available?
For tax purposes, AgDirect classifies leases as either true leases or conditional sales leases.
With a true lease, the full lease rental payment may be deducted as an operating expense rather than depreciating the asset. With a conditional sales lease, depreciation is handled similarly to a loan while still providing the flexible financing associated with a lease.
Because tax situations vary by operation, growers should work with their tax professional to determine the appropriate treatment for their circumstances.
How can an equipment lease save me money?
With a lease, payments cover the portion of the equipment’s value expected to be depleted during the lease term. This can result in lower lease payments compared to traditional loan payments and may help free up cash for other needs within your operation.
For example, AgDirect explains that a lease could be structured to finance only 60% of an asset’s economic life. On a $100,000 piece of equipment with a 40% residual value, lease payments would cover the remaining $60,000. At the end of the lease, you could have the option to purchase the equipment for the remaining residual value, return it or trade it toward newer equipment.
How are lease payments determined?
Lease payments depend on several factors, including the equipment cost, lease term, payment structure and residual value established for the equipment. AgDirect explains that the residual represents the estimated value of the equipment at the end of the lease and can affect the amount of your lease payments.
Can I trade equipment before my lease is over?
Yes. The AgDirect FAQ explains that equipment may be traded during the lease term. The existing lease would need to be satisfied as part of the transaction, and a new lease or loan could then be established for the replacement equipment.
This can provide additional flexibility for operations whose irrigation equipment needs change over time.
What’s the difference between an equipment lease and a loan?
With a traditional equipment loan, you borrow money to purchase the equipment and repay that amount plus interest.
With a lease, the leasing company provides the use of the equipment or machinery in exchange for periodic lease payments. In essence, you pay a usage fee for the equipment while it is being used rather than paying interest on a loan. AgDirect also notes that leases are typically treated differently than loans for tax purposes.