EQUILOG BLOG
A guide to Renting or Buying Heavy Equipment
- Details
- Written by Super User
- Category: Equilog Blog
Whether you are a business owner or project manager in the construction industry, you thoroughly understand that acquiring new equipment is a serious investment and commitment. And depending on what your company’s immediate and long-term needs are, considering certain important factors will make it much easier for you to figure out when you should buy or rent your heavy equipment.
When it comes to heavy equipment, both renting and buying have their own pros and cons. Deciding between these two options becomes much easier when you thoroughly evaluate the current capabilities and future plans of your business. The initial cost of the heavy equipment is certainly a major deciding factor. However, it is also important to consider factors such as availability, usage, maintenance, and many others.
Financial
The cost of renting over a long period can hurt you badly, particularly if you are not going to use it for the entire rental period. Not to forget, when you own equipment, you also have the option to earn a return on your investment by selling it. There is no doubt that purchasing heavy equipment is a large financial outlay. However, it is also important to look beyond the present and think about your probable requirements and costs over a period of time. The initial financial impact of purchasing heavy equipment can be reduced by one of these options;
(a) Refurbished equipment
(b) financing the purchase or
(c) Opting for well-serviced used equipment.
Aside from ownership, you will also have a bear several other costs such as maintenance and operating costs. In general, the rental cost is inclusive. However, be prepared to pay the equipment transportation cost over and over again. The cost of fuel covers one-third of the total cost and is the same for renting and purchasing.
Equipment Availability:
The biggest benefit of having your own equipment is round-the-clock availability. Therefore, it is easier for you to respond to unexpected changes in project schedules. Before taking a final decision, you should also evaluate the potential risk of the rental company failing to provide the equipment when it is required or failing to provide swift repairs after a breakdown. Owning heavy equipment will also create an impression that you are a trustworthy and stable business capable of handling the jobs on its own.
Project Length and Job Frequency:
This is another major consideration when choosing between renting and purchasing heavy equipment. Renting will probably make more sense for a one-off job or a short-term project. However, there is a probability that you may end up losing money due to unforeseen hold-ups or sudden changes in the project schedule. On the other hand, buying is a better idea for a long project because rental costs can add up rapidly for jobs that go on for a long time.
Fleet Management and Inventory Control
Before jumping into to owning your own fleet of equipment or new equipment, you should always consider equipment management and inventory control. Do you have the skills and the time, or the employees to take care of insurance, maintenance, etc? If you don’t, you may want to pay a little extra to rent.
When it comes to heavy equipment, both renting and buying have their own pros and cons. Deciding between these two options becomes much easier when you thoroughly evaluate the current capabilities and future plans of your business. The initial cost of the heavy equipment is certainly a major deciding factor. However, it is also important to consider factors such as availability, usage, maintenance, and many others.
Financial
The cost of renting over a long period can hurt you badly, particularly if you are not going to use it for the entire rental period. Not to forget, when you own equipment, you also have the option to earn a return on your investment by selling it. There is no doubt that purchasing heavy equipment is a large financial outlay. However, it is also important to look beyond the present and think about your probable requirements and costs over a period of time. The initial financial impact of purchasing heavy equipment can be reduced by one of these options;
(a) Refurbished equipment
(b) financing the purchase or
(c) Opting for well-serviced used equipment.
Aside from ownership, you will also have a bear several other costs such as maintenance and operating costs. In general, the rental cost is inclusive. However, be prepared to pay the equipment transportation cost over and over again. The cost of fuel covers one-third of the total cost and is the same for renting and purchasing.
Equipment Availability:
The biggest benefit of having your own equipment is round-the-clock availability. Therefore, it is easier for you to respond to unexpected changes in project schedules. Before taking a final decision, you should also evaluate the potential risk of the rental company failing to provide the equipment when it is required or failing to provide swift repairs after a breakdown. Owning heavy equipment will also create an impression that you are a trustworthy and stable business capable of handling the jobs on its own.
Project Length and Job Frequency:
This is another major consideration when choosing between renting and purchasing heavy equipment. Renting will probably make more sense for a one-off job or a short-term project. However, there is a probability that you may end up losing money due to unforeseen hold-ups or sudden changes in the project schedule. On the other hand, buying is a better idea for a long project because rental costs can add up rapidly for jobs that go on for a long time.
Fleet Management and Inventory Control
Before jumping into to owning your own fleet of equipment or new equipment, you should always consider equipment management and inventory control. Do you have the skills and the time, or the employees to take care of insurance, maintenance, etc? If you don’t, you may want to pay a little extra to rent.
Be Aware of Depreciation/Resale Value
Do your research on the different brands and models before you decide to purchase the construction equipment that you need. Some may hold their value better than others and will be a better investment for resale value. Buying quality used equipment can be a good option too. If you know you may be selling in the future, selecting the right equipment based on annual depreciation and performance might be the financial difference that helps you decide to rent or buy.
Renting vs Buying Equipment
Renting:
Lower initial investment
No need to handle maintenance, insurance, etc.
Access to a wide range of equipment
Latest equipment available
Maintenance is always the duty of the supplier/owner
Buying:
Round-the-clock availability of the equipment.
More economical over a period of time.
Guaranteed return on investment.
Full Control over the operator
Minimizes downtime.
As mentioned briefly, a number of financing options are available while purchasing heavy equipment. We can suggest a few equipment financing companies to help you find the best deals for your project.
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