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Should you buy or lease heavy construction equipment? Many businesses face a difficult decision regarding their heavy equipment needs: whether to buy the equipment outright or choose heavy equipment leasing is what it comes down to. For a business to succeed, you need access to equipment when you need it. In recent years, businesses have been opting to lease their equipment rather than purchase it. So why this case and what is some of the key differences in leasing and buying equipment?
When should a company lease heavy construction equipment?
As mentioned earlier, when it comes to deciding whether to purchase or lease heavy equipment, buying heavy equipment can be extremely expensive, especially if you don't have the budget available. While equipment can be essential, tying up large amounts of capital in a small section of your business can have ramifications that ripple throughout your business. Heavy equipment leasing can provide a lifeline for cash-strapped businesses in need of equipment.
Equipment leasing is when an organization, such as a bank, leasing company or equipment manufacturer, leases equipment to the business at a low monthly rate for a specified term. Leasing equipment can help you better manage your cash flow because there are fewer expenses up front and you have a predictable payment each month, making long-term budgeting easier.
When deciding between leasing and purchasing heavy construction equipment, you should first evaluate your company's current situation and growth plans, and assess which method will benefit your company more. If you have limited capital or need equipment that needs to be upgraded every few years, leasing heavy equipment will benefit your business. However, if you are an established business or if your equipment has a long lifespan, purchasing equipment may be a better option. Contact an equipment leasing company to learn more about the different financing options.
5 reasons to choose heavy equipment rental
Similar to leasing a car, leasing heavy equipment is an option that frees your mind from maintenance. With its comparatively low initial expenses, it allows you to keep more liquidity and flexibility, two important assets in the current economic context. For many, it's a matter of common sense.
How do you know if you should rent instead of buy?
The big question! This decision involves many variables that are specific to your business:
Your financial situation,
Your equipment usage habits,
Your internal resources for maintenance,
The work you have in progress.
Benefits of leasing
To help you make your decision, here are some of the benefits of renting:
More cash flow
Rather than tying up your money in a large down payment and financing costs, you can recover 100% of the rent cost with the revenue generated by an ongoing project. Lease fees are also immediately deductible and there are no associated costs for warranties, insurance, shipping or storage, freeing up even more cash flow.
Of course, renting does not involve a long-term financial commitment. You simply return the equipment when the project is complete and the payments end. This eliminates the risk of having to carry an expensive inventory of new machines that would sit idle between projects and lose their value. Leasing also improves efficiency because in the event of a breakdown, you can usually replace a rental machine on the spot.
Greater flexibility to bid
Most heavy equipment rental companies offer a wider selection than a single construction company can offer. This means you can bid on projects with peace of mind, knowing you'll have the right equipment on hand if you get the contract, while not having to manage the risks associated with owning equipment that will sit idle if the contract goes to someone else.
Renting is a cost-effective way to avoid equipment depreciation and to immediately add more efficient and emission-compliant machines to your fleet. Having access to the latest equipment is a considerable advantage when you respond to a service offer. It also allows you to improve your crew's productivity and your fuel consumption, which increases your profitability on the job site.
More time to focus on the job.
Renting reduces the burden of machine maintenance, repair and insurance, giving your crew more time to focus on the job at hand. Efficiency is key in this industry where labor shortages are increasing and competition is higher than ever.
Your business model will guide you in your decision to rent or buy equipment. These few points in favor of leasing should still help you when you are bidding on new projects. Now you know you can ahead know you have access to the right equipment at the right time.
Heavy equipment rental company benefits
Material handling is usually done in warehouses, factories, or department stores. Companies that need to do regular maneuvering are forced to allocate financial resources in machines to be able to perform its daily handling operations. This step plays a very important role in the production chain.
Renting to reduce investment costs
The main advantage of renting handling equipment is, without a doubt, economic. Indeed, these machines represent heavy real estate investments for a company. An electric forklift truck, for example, represents an investment of up to thirty thousand euros, or even much more depending on the range and its characteristics. On the other hand, the rental of these devices costs more or less hundreds of euros, depending on the model chosen and the rental period. Go here to rent an elevator, the versatile tool that is used in different sectors. In many of these sectors, such as construction, public works, industrial and many others, a company might have to use different machines for each handling job. And yet, buying different machines represents a significant investment that will surely impact on the company's profitability. Renting is then a better option in terms of financial resources involved.
Take advantage of the latest professional equipment
Companies, especially industrialists, justify their preference for renting by the fact that with this option, they can dispose of various machines according to their needs. But what is even more appealing is that they can rent the latest models of material handling equipment. When renting a forklift, the renting company can benefit from machines with the latest technological innovations. The use of state-of-the-art equipment will optimize the company's productivity, making it much more efficient and fast. Some rental companies are even committed to offering environmentally friendly lifting equipment.
In addition, to choose the right forklift, it is necessary to take into account where it will be used. Prefer machines with a thermal engine for outdoor use, diesel or gas. For indoor use, it is recommended to opt for an electric forklift. However, if it is used both indoors and outdoors, it would be wiser to choose a thermal engine forklift, while ensuring that the interior of the warehouse or building is well ventilated. Also, choose your machine according to the average weight of the loads to be lifted. Also, consider the distance it will be used during the day, as well as the intensity of its use.
Storage and maintenance
The constraint that is often encountered when acquiring real estate is storage, to which must be added maintenance if it is handling equipment. Two problems that are well solved by renting. Indeed, a company may not have enough space in its warehouse, shed or garage to store a machine. It happens that one prioritizes the location for goods and other materials. Therefore, for these companies, renting is the best solution. As far as maintenance is concerned, the company is exempted from this responsibility. In fact, it is the renting company that offers the guarantee of maintenance. This considerably reduces the production costs.
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