Now that you need equipment due to upcoming project or you have multiple projects going on at once, or you just need to replace the one you have, you may be hit by a decision if it is time to buy or just rent equipment.
You have to think which one is most advantageous to your company’s current status.
Renting gives the business owners the flexibility to use it in short period and return it when no longer need.
From which you can benefit and what is more cost-effective? Here are the considerations you have to keep in mind before deciding which route to take.
Is Renting Equipment the Best Option for You?
There are a number of advantages you can obtain from renting instead of buying:
- If you just need it in short-period, then renting is more practical. You would not want to have idle equipment that only collect dust and depreciate in value if you buy one. Renting is the way to go when you only need it in short term.
- In renting, you can choose modern and up-to-date type of equipment that gets the work done faster. In turn, you can save money. Modern equipment tends to be safer to use, mitigating accidents in the job site, few accident means less insurance cost.
- In renting, you can avoid incidental costs in service repair and operator training. We all know that owning equipment requires regular maintenance to keep it in tip-top shape. Maintenance cost is astounding; you can spend thousands of dollars a year just to replace its spare parts. In addition, you don’t have to worry about operator training that could also add-up to the cost of operation.
- You don’t have to allocate portion of the company money in building spaces to store the equipment. Storage facility is temporary and can put out of use when the equipment is no longer in operation. You would not want to invest in such facility.
- Renting equipment gives the company owner the option to try out if that kind of equipment is suited for the work application. Then later on, the company can come up with the decision to buy. You avoid the risk of spending large money if the equipment doesn’t go well with the job requirement.
- You can get rid of the transport cost. If you own equipment and you need to move it to another work location, the transport cost can take a big portion of your profit. It would be wise to rent from a rental company located near the work site and by doing so you keep your profit away from suffering.
- No depreciation cost. Buying new equipment is like buying a brand new car, its value depreciates over time. You can think about renting to avoid losses related with value depreciation.
- You don’t have to pay for the licensing fees and insurance cost. They are handled by the rental company. Of course, the amount to spend varies from machine to machine.
- Renting gives you the flexibility to choose the rental rates. You can rent the equipment in daily, weekly or monthly. The scope of your project determines the rate. With rental, you don’t have to spend money on equipment you are not actively using.
These are some of the benefits you can reap from renting.
But you may also find yourself in a situation when buying your own equipment makes more sense and practical than renting.
So When Then You Need to Buy and Own Equipment?
- If your business is involved intensively in operating heavy equipment, then owning can be the right choice to make. If you fall under the construction industry, most likely, you have the capacity to maintain and to store the equipment. Thus, buying is more advisable than renting.
- If you have long project and tighter job frequency then buying equipment could be a viable choice. If you know that you will be operating the equipment in every day of the year and for years to come, buying is a suitable option. Buying is cheaper over the long term.
- If you are constantly acquiring new projects. You will have the confidence to handle many projects because you have equipment at your disposal, you won’t have the concern of acquiring equipment needed for the job - you can deploy or move it from project to project since you own the equipment.
- Your company can benefit from tax deduction. You can deduct the insurance in maintaining the equipment, depreciation and repair cost and interest in purchasing it.
If You Decided to Purchase, Will You Buy Used or Brand New One?
Here are the Benefits of Buying Used Ones:
- You don’t have to fret over the loss of depreciation. A brand new equipment that has been sold typically depreciates its value within 12 months. The value drops from 20% to 40% of its original brand new price. After the drop, the equipment’s worth will likely to remain for years to come. Used equipment has stronger resale value compare to brand new.
- If you buy used equipment you are likely to get the same distinct features and operational quality at a much lower price of course. It is cheaper and more economical to buy used ones.
- When you need it right now, you can purchase it right away after inspecting. Unlike the brand new ones that you have to wait for months for it to be manufactured because it is not readily available in the market, used equipment can be bought conveniently online. You can browse through the internet or look in classified ads websites.
- You have the freedom to choose which brand and model you want without overspending your budget. If the equipment is still in good shape and works well, then definitely, buying used one can be ideal solution to increase members of your fleet.
While, brand new equipment has its own distinct advantages:
- With brand new equipment, the risk of untimely breakdown and costly service is put to minimal. Remember that defective equipment can halt the work progress. It can cripple the business operation for a day or more. It can put dent on your profitability and the company will suffer.
- Buying brand new equipment is fully covered by manufacturing warranty. You can avoid purchasing pricey spare parts.
- Purchasing new one means it is updated to the current technology. Having such equipment on site can make the job faster and easier. Thus, you can complete the project ahead of time.
- Brand new ones are safer to use. Old equipment post different dangers during operation. With old equipment chances are its electrical may already suffering from failures, it has damaged and worn parts that make it more dangerous to use, it is already experiencing structural failure.
- Saving time on the work site. With new equipment tend to commit less breakdown and repair, as a result you can eradicate delays, and keep the project running smoothly.
To Make a Conclusion
More and more companies are taking the route of renting. The sudden surge in renting equipment could be due economic standing of the company or the market trends, there is one thing for sure – renting heavy equipment is the practical option and it is likely to remain in trend for years to come.
With the advantages and disadvantages of renting and buying equipment mentioned above, you can make a final decision which one is right for you.
In many cases, renting has important advantages that benefit you, just like in buying.
The bottom line in choosing between renting and buying equipment is the money consideration.
It is all up to you which choice to make.