Construction Equipment – Should You Buy or Rent?
Construction equipment is also known as engineering vehicles. These pieces of machinery are specially made to carry out construction and other engineering work.
Financing construction equipment
The financing that is required for the purchase of construction equipment is specially arranged through a heavy equipment leasing company like Crane Hire Peterborough. The construction market is fast rising in popularity after experiencing an economic slump for years. Only companies and small start-up businesses who have a substantial amount of capital can afford to buy brand new construction equipment outright.
Renting construction equipment
If you do not have the money to buy it, the traditional way is to rent or lease construction equipment. This is the best option for those who do not have a substantial amount of money to get started. The contractors who are unable to buy new construction equipment have the opportunity to resort to some alternative arrangements. The rental of construction equipment is an excellent option for those who have a short-term need for such pieces of machinery while renting can alternatively be a sound option for those who have long-term needs. A survey made in the market reveals that there is less clamour for contractors to own pricey construction equipment and many of them prefer other alternatives such as renting or leasing these machines. Many of them opt to rent.
Buying vs renting
Renting must be seen as a precursor to buying as it affords one a chance to test the construction equipment without shelling out a significant sum of money and being entangled in very long-term investments. Usually, the rental of construction equipment can last for six months and can even lead to outright purchase to avoid the loss of equity investment.
One good example is where three contractors bid for a project, where the contractor with the equipment has to consider the overall interest amount on financing the purchase while at the same time costing the entire project. Whereas the construction company that opted for a rental-only option must consider recurring monthly payments for rental while making an estimation for the project. The contractor who rents the equipment has to calculate the rent he is going to pay and is not burdened with equipment which will not incur any loss when left unused for some time.
Financing the purchase of construction equipment
To make matters worse, there are so many kinds of financing schemes out there. They offer a wide range of plans for contractors with repayment terms that average anywhere from 3-5 years in total. Several manufacturers like Caterpillar or John Deere finance construction equipment where they allow the contractor to rent directly from them. This kind of sources practically serves almost 20% per cent of the construction equipment market.
Banks likewise offer financing opportunities. But, due to the inherent risks, many banks and financial institution steer clear of the construction market segments. Approximately 60% per cent of financing construction equipment is performed by banks or other ancillary banking corporations.