Is it Easier to Rent or Buy Heavy Equipment?
Do you currently rent or lease your equipment but are looking into buying? Many business owners come across this path and the decision is very crucial to the financial health of the company. No matter where you business stands, it’s important to figure out what’s best. Whether you want to rent or buy heavy equipment, you need to know the pros and cons. First Capital is familiar with helping our clients in both renting and buying heavy equipment, such as yellow iron, commercial vehicles and manufaturing machinery. It is our job to help you decide what is best for you and your business.
Size Does Matter
Depending on the type of equipment, size can have a huge factor in your decision. If you’re in commercial construction, you’ll need to consider where you’ll be storing your equipment. More than likely, you’ll be using a Tower Crane or All Terrain Crane. If you have your own yard with enough space, then there’s no problem. This type of equipment typically requires special skillsets to operate the crane. Renting a crane may be the best solution if you don’t have someone in your business who can operate the equipment.
A skid steer is smaller than a crane, so storage isn’t an issue. If you’re in pool construction and in need of skid steer or mini excavator, both of those are small enough to keep in a small garage. Finding someone within the business to operate these type of equipment shouldn’t too big of an issue. But for this type of equipment there are other factors you’ll need to consider, such as cost. When renting, you’ll never have to worry about maintaining the upkeep on the unit. When you buy heavy equipment, you’re responsible for all the maintenance. The cost of financing fuel, insurance, and monthly payments, and maintenance starts to add up. Those expenses could exceed rental costs, especially if you’re not utilizing the equipment as often.
If you work for a seasonal business, you may consider renting instead of buying your equipment. This is only because you’re using your equipment a few months out of the year. As a pool contractor in an area where you can only work for 8 months, you put away your equipment for 4 months.That’s 4 months you won’t be able to make use of the skid steer. In this case, it might be wise to rent for the time you do work with equipment. Most businesses are able to figure out ways to capitalize in different businesses during the “slow time”. For an example, you can use a skid steer to plow snow, clear roads, or move firewood. If you have a way to make money with the equipment during your off season, then it would be okay to buy heavy equipment.
One of the most important factors is finance. There comes a point when renting just doesn’t make sense. If rental payments are more than the cost of the equipment, wouldn’t it be better to buy it? It’s easy to project what a job will cost, you can build in your rental cost, materials, labor etc. Where it gets tricky is long term financial commitment. Will you have enough work in the future to make the monthly payments if you were to purchase and finance the equipment? Only the business owner will know if their business will produce the revenue to debt service the equipment for a purchase or for renting.
Let First Capital Help You Rent or Buy Heavy Equipment Today
In the long run, it’s easier to rent than buy heavy equipment. The qualifications are more simple when renting most equipment, but qualifying to finance the equipment can be challenging if you’re unaware of the available programs. That’s where we can help. First Capital can inform you on all of our programs. with renting equipment. We even have programs for start-up companies, even with challenging credit. Call us now at 888-565-6692 to chat online with our advisers today and learn about our programs today.
Should You Rent or Buy Heavy Equipment | First Capital Business Finance