| September 2023 |.
Suppose you need to look for suitable site equipment when preparing for your construction project, and your current fleet does not cover the load. Then there are several factors that influence the buy, rent and lease decision in equipment selection, including capital budgeting, equipment specification, life-cycle cost analysis, financial and risk management strategies and employee training, among others.
With the surge in demand for construction equipment, contractors are purchasing more machines, but at the same time have entered into rental and lease agreements to support their own fleets.
Actually, there is no ready-made answer as to whether you should buy, rent or lease construction equipment. It will always depend on the unique circumstances you face.
In this article, we have listed some points in favor and against each choice that can certainly help you make the right decision for your projects.
1. Working capital is not linked to the equipment.
2. The lessee gets a tax deduction because lease payments are treated as expenses.
3. You can select specific equipment features you need.
4. No major capital outlay required.
1. Only a limited number of machines are available in lease plans.
2. You have no assurance that the equipment you need will be available when you need it.
3. Contract duration is often much longer than a lease.
4. Contract hours (e.g., number of machine hours included in the price) can be challenging and should be negotiated.
Procurement of new equipment may be based on telephone information, technical and financial evaluation,ordering, contract formation/purchasing, transportation, assembly and installation and operation/commissioning.
1. When it is a short-term project and/or the equipment is not needed full-time.
2. It is more flexible because you spread the rental budget over monthly installments.
3. A rental company can offer additional added value, such as providing skilled labor, repair and maintenance formulas, etc.
4. You only pay for its use and the period you need it.
1. If you use the equipment over a longer period of time, rental costs may well increase, making it more expensive than a purchase.
2. Potential choice limitation of rental offerings.
3. Renting means higher monthly payments than loan financing and leasing.
4. Some specialized equipment may not be available when needed.
Points for leasing formula
1. Working capital is not linked to the equipment.
2. The lessee gets a tax deduction because lease payments are treated as expenses.
3. You can select specific equipment features you need.
4. No major capital outlay required.
1. Only a limited number of machines are available in lease plans.
2. You have no assurance that the equipment you need will be available when you need it.
3. Contract duration is often much longer than a lease.
4. Contract hours (e.g., number of machine hours included in the price) can be challenging and should be negotiated.
To make an informed decision, be sure to consider factors such as frequency of tool use, length of projects, budget constraints and availability of storage and maintenance resources. It is often wise to conduct a cost-benefit analysis to determine which option makes the most sense for your particular circumstances. In addition, consulting with industry experts or equipment rental/lease companies can provide valuable insights tailored to your needs. In reality, it will often be a combination of different solutions that will provide the most benefit for your specific business needs.
Regardless of your decision to buy, rent or lease, it is always a wise choice to hire an equipment management system. Why? Well, there are a number of important pluses of a management software for your yard equipment:
* You maintain an overview of all your site equipment at various locations and know perfectly where your equipment is.
* All important information about your equipment (manual, inspection documents, maintenance booklet, etc.) is digitally linked and can be accessed by your employees via smartphone.
* Machine running hours can be read remotely, so you always know the operational state of your equipment
* Thanks to digital inspection, time recording operational hours, and maintenance or inspection alerts, you ensure that your equipment is always 100% deployable and avoid high repair or replacement costs.
Have this blog answered your questions, and would you like to learn more about the cost or spar with us about the right application for your business? Then contact us directly by phone 03 289 55 35 or click here to ask for more info or book a consultation.
Also read our other blogs on tracking and monitoring corporate assets:
After reading this blog, are you curious about which tracking and digital solutions All-Connects offers? Ask us your question and we will answer you as soon as possible.
