Ultimate Guide to Renting or Buying Heavy Equipment
Often, when faced with needing construction equipment, many companies focus on analyzing the pros and cons of renting versus buying. Though a vital step in the process of determining what equipment will best suit their specific needs and budget, there’s much more to be examined in order to get the most out of your equipment.
Our latest infographic, “Navigating the Heavy Equipment Rental Process,” helps walk you through the initial assessment of whether renting or buying heavy equipment is the best option, then provides additional tips about the next steps to take when renting equipment.
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There is no universal “right decision” when it comes to the question of renting or buying equipment. Figuring out the best option for you means evaluating your current financial situation, considering the length and frequency of the project, and calculating the cost of a rental compared to the total cost of ownership. Ownership costs not only include the upfront price of the equipment, but costs associated with financing, maintenance and repairs, insurance, transportation, storage, and energy.
It’s important to take the time to estimate the costs associated with each option, as many people are often surprised to learn that the cost of owning a piece of construction equipment can be upwards of $30 an hour. To help you find the average cost of ownership, you can use pre-existing online calculation tools from various manufacturers, like Volvo’s calculator.
The benefits of buying include:
- Cheaper over the long term
- Getting a return on your investment
- Available equipment whenever you need it
- Possible tax advantages
The benefits of renting include:
- Manage your risk and conserve capital
- Access to a broad range of equipment
- Save on storage expenses
- Maintenance handled by another party
The construction industry is project-driven, meaning that oftentimes equipment is left unused for substantial periods of time until it’s needed for a new project. Unfortunately, this leads to equipment depreciation. Renting provides an alternative solution in which rental fees are immediately deductible as opposed to depreciated over a long period of time. Therefore, at least for the short term, construction businesses immediately benefit.
Rental equipment can also deliver some long term benefits, such as allowing you to investigate new business opportunities at a lower risk rate. Renting provides the flexibility to diversify into new markets without any heavy capital investment or extended commitments. One of the other perks of renting is that you’re not responsible for keeping the equipment in line with government regulations.
In recent years, Environment Canada aligned Canadian emission standards with the US EPA for non-road engines, including emission limits, testing methods, and effective dates. Based on their year of manufacture, certain heavy machines may be subject to stricter regulations. When determining whether to rent or buy, the best choice is the one that will increase your overall revenue stream.
If a company makes the decision to rent, their next decision needs to be what equipment company they want to do business with. It’s important to compare the rates of heavy equipment rentals between companies, but there are several other questions to address as well that may not immediately come to mind.
For example, make sure to ask about their billing policies and if there will be any additional fees throughout the process. Many equipment rental companies will charge you extra if the equipment is not fully refueled and cleaned before it is returned. Avoid any unexpected charge by simply asking first.
Also, ask detailed questions to understand the logistics of the rental operation: what is your maintenance schedule for equipment? What are your pickup and delivery times? What is your response time if the equipment isn’t working?
In addition to finding the right company, you also need to find the right piece of equipment to suit your needs. Determine exactly what you’re looking for—if you find that you can complete two tasks with the same machine this will save you both time and money than if you rented two pieces of equipment for separate tasks. Though it may sound like common sense, doing research on the functionality of a machine can be a financially beneficial step in the process of renting equipment.
Looking for a rental for your next project or job site? See our full list of rental equipment here.