Should you buy, lease or rent construction equipment?

Are you a construction firm looking to acquire new or used construction equipment? There is a variety on the market you can choose from, including track excavators, graders, forklifts and backhoe loaders for sale. However, it is essential to recognise that a construction firm needs equipment and machinery that is up-to-date, reliable, and in good condition. Deciding on whether to buy, lease, or rent is never easy. To make the best decision for your firm, you need to understand, analyse and review factors such as employee training, financial and risk management strategies, lifecycle cost analysis, equipment specifications, and capital budgeting.

Buying

Purchasing equipment is the most straightforward method. Owning gives you full control, making you responsible for upkeep and maintenance as well as determining how and when to use it. Buying provides ownership security, especially if you are planning to use the equipment often for an extended period. The general rule of thumb supports the idea that you should buy equipment when you are using it more than 65 per cent of the time. If your business or company is operating at a profit and you aren’t borrowing any money, buying can be more advantageous. Purchasing can also give you a better deal, particularly towards the end of the year when models for the current year are being replaced or upgraded.

Leasing

Just like leasing a car, contracts for leasing construction equipment usually run for three to five years. At the end of the lease, you may ask to buy the machinery. Although the benefits of depreciation may be passed on to you, the equipment still belongs to the leasing company. Since the machinery is in your care, you are responsible for keeping it in good condition. However, the leasing company will be in charge of maintenance, such as repairs. If you are not going to use the equipment more than 65 per cent of the time, leasing is usually the best option. This can significantly save you from spending an uncomfortably large amount of cash or making a hefty down payment.

Renting

Similar to leasing, renting is an excellent option since it gives you access to the latest models of equipment for a minimal time. Unlike leasing, rentals are usually short term, making them more risk-free, flexible, and economical. Although it may appear as the most expensive option on the surface and does not offer tax advantages, it presents you with the opportunity to try out new models of equipment and assess their capabilities before deciding on whether to purchase or lease one yourself.