Construction Equipment – When to Buy, Rent or Lease?



Equipment is a necessary tool for a project in construction industry. When deploying your construction equipment for a project site, the question whether to buy, rent or lease must be tackled in a very sane and judicious way. Important questions pertaining to the duration of the need for equipment, the number of hours it’d be working at sites and geographical suitability must be answered to come to a decision.

There are various factors that affect the buy-rent-lease decision in an equipment’s selection. With the surge in the demand for construction equipment, contractors have been buying more machines and at the same time have also been adopting rentals and leases to assist their own fleet.
Below points will help to understand the buy-rent-lease decision.
First, understand for Buying

Buy

Ø  While working on project if equipment is used for most of the construction period and likely to complete almost its full life then it is helpful to buy otherwise not advisory.
Ø  The benefit of buying it is that, occupants can utilize it whenever it requires.
Ø  Contractor can meet danger of obsolescence. Since it’d be an owned equipment it would be kept in better mechanical conditions and is more reliable.

Let’s move on to Rent part.

Rent   
                                                 
Ø  It’d be smart to rent equipment if the job is of short duration and there is no continuous need of the equipment. It can be costly.
Ø  When it comes to the disbursement of payment, it’s flexible.
Ø  It has higher monthly payments than loan financing and leasing. It has benefit to pay only for use and time you need it.
Ø  There is a disruption may occur that some specialized equipment may not be available when it is needed.

Lease    
                 
Ø  Working capital is not tied up in equipment.
Ø  Lessee gains a tax deduction because lease payments are treated as an expense.
Ø  You can choose the specific features you want on the equipment.
Ø  No large initial capital outlay.
From above points one can get an idea whether to invest, rent or lease.


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Blog written by

Shruti Doshi
Technical Officer – Sanghi Cement & Blogger
shrutidoshi.1492@gmail.com

Blog Managed by

Nirav Pandya
Digital Marketing Officer – Sanghi Cement
nirav.pandya@sanghicement.com

                                     


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