Construction equipment is a huge investment, these heavy duty vehicles were built to carry out very specific tasks and before you pay the hefty price to buy one of these vehicles you need to make sure that your company can recoup the costs. There are other options to buying you can also lease or rent any equipment that you need. That leaves you wondering…should you buy or lease your equipment? Let’s have a look at both options so you can make the right choice for your situation.
Leasing or Renting
If you choose to lease your equipment then the financing will be done through a leasing association. Most companies cannot afford to buy outright, they simply don’t have the cash on hand. Leasing or renting is usually the best option for contractors that aren’t flush with large reserves of cash. If you only need equipment for a single project or just a short period of time then leasing or renting makes far more sense than buying heavy equipment.
Most contractors today don’t want to own the equipment, they don’t want to absorb the costs nor do they want to maintain the equipment year after year, making leasing a much better option. Leasing or renting also provides you with the chance to test the equipment without the burden of cost or investments over the long term. However many leases start out with a 6 month agreement and at the end of which you have the option to purchase, this saves you the loss of equity investments. Always read the fine print construction financing can be complicated. Here is a breakdown of how it works.
An outright purchase is exactly that, you pay the purchase price and the equipment is yours to do with as you please. Leasing, on the other hand is far more complicated. You will have recurring payments and there are lots of different financing options. You can have repayment terms that can vary from 6 months to 5 years.
Manufacturers like Caterpillar or John Deere have their own financing departments, giving you the chance to deal directly with the manufacturer. This cuts out the middle man making the costs much lower. You will need to have excellent credit to qualify, otherwise you will need a third party that offers financing to those with some blemishes on their credit report.
As to whether you should lease or buy heavy equipment, that will largely depend on how long you will be using it. If you do heavy construction then buying may be a better option. If you only have the one project in front of you then leasing short term or even renting is better.