Builders and contractors are increasingly switching over to renting construction equipment instead of buying it. Several factors are responsible for this switch. A volatile market and the increasing cost of construction equipment have also played a major role in this. Companies are able to cut costs and save money by renting equipment instead of buying it. Let us look at some of the benefits of renting construction equipment instead of buying it.
1. Purchase Cost of Construction Equipment
Brand new construction equipment is costly and adversely affects your budget. It is a long-term capital investment that may or may not be used in future projects. Leasing or renting construction equipment helps you avoid the high expenditure associated with purchasing. The monetary resources saved can be better utilized in other business areas.
2. Savings on Maintenance and Repair Costs
If you purchase the equipment you have to spend money on periodical maintenance and repair costs. These are essential for keeping construction equipment in shape. Construction equipment rental, on the other hand, will not cost you any maintenance and repair costs. You can rent the equipment for the project period only and then return it back. All the repair and maintenance costs will be borne by the rental company depending on the contract signed with them.
3. Saving on Insurance Costs
Insurance premiums for high-value construction equipment are high. These include the whole wide gamut of theft, damage, accident, fire and other insurance costs. When you rent construction equipment you only pay for the rent. The rent may include the insurance costs in the package but they will only be a fraction of the price you had to pay in case you were the owner.
4. Safety from Market Fluctuation
There is instability in the construction field due to pandemics and a whole lot of other circumstances. Buying costly construction equipment ties you down with it. A sudden shift of the market may cause drying up of the projects and the borrower gets stuck paying the debts from their savings instead of earnings. Renting construction equipment protects you from investing your rainy day savings or borrowing high-interest money to buy costly equipment. It thus cushions your business from financial uncertainty.
5. Using State-of-the-art Technology
Construction equipment cannot be easily replaced or sold. Once you buy it, you have to keep and use it for a number of years. It may become obsolete and may not work as per your needs. Construction equipment rental on the other hand you can select to your liking. Pick the one that is best suited for the job and only pays for rent. Use cutting-edge technology instead of sticking with an obsolete piece of junk.
6. Use as Per the Project
You may be juggling a number of projects at once. Purchasing different equipment for different sites is not a practical decision. And transferring equipment from one place to another becomes a scheduling nightmare with projects getting stuck while waiting for the equipment. Instead, rent the specific pieces of equipment as per the project requirements. It will eliminate the delays and lead to timely completion of projects.
7. Transportation Issues
Continuing on the above theme, renting construction equipment eliminates logistics headaches on transporting machinery to sites. Transporting heavy construction equipment to multiple sites leads to delays, lowers productivity and thus impede the project process. Renting equipment helps you avoid these delays and keeps the project on track
8. Tax Saving
Purchased construction equipment is capital expenditure items that are taxed at the depreciated cost for the life of the equipment. Rental expenses on the other hand are tax-deductible depending on the nature of business and may save you a considerable sum.
9. Maintain Strong Balance Sheets and High Credit Rating
Construction equipment rental expenses are not considered a liability in the balance sheet. Purchased equipment on the other hand is a depreciating asset and the loan taken to purchase it is a liability. Therefore, to maintain a strong balance sheet and high credit rating it is better to rent equipment than purchase it.
10. No Equipment Storage Issues
If you own construction equipment then you need to have the optimum amount of space for its proper storage. Without proper storage, your precious equipment will break down and depreciate faster. High warehouse and storage costs also increase your expenses and thus lower profit margins. Renting equipment will allow you to save on these expenses and shore up the business profits.
So, these are some of the benefits of construction equipment rental. Renting equipment improves efficiency, saves time and a substantial amount of money on insurance and maintenance costs. Business and project needs may differ from one another. So, weigh your options, plan accordingly and then make the right purchasing or rental decision as per your business needs.