5 Benefits of Renting vs. Buying Heavy Equipment

Heavy equipment is at the center of every construction operation, no matter how big or small it is. Indeed, without having the right kinds of machinery on hand, it is impossible to complete projects that require digging, hauling, loading, and compacting, for example.

From one job to another, many different types of heavy equipment are required. Without having access to certain types of such equipment, your construction company may not be able to bid jobs competitively, losing out on the potential to earn significant revenue and grow your customer base. 

If you want to avoid unnecessarily losing such opportunities, the only way to do so is to ensure you have access to a wide range of heavy equipment. This means growing your fleet by buying, renting, or leasing new machinery you do not have yet. 

Purchasing equipment generally refers to buying it with one lump sum payment or installments, which ultimately results in you becoming the legal owner. When you rent heavy equipment, on the other hand, a large down payment is not required. Instead, you sign a rental contract and pay a pre-arranged monthly fee to rent the equipment, which you must return when the contract expires.

Heavy equipment lease contracts are somewhat similar to rental contracts, except there is typically room to extend the lease, acquire the equipment, or return it once the contract is up.

What are the main benefits of renting heavy equipment instead of buying it?

Once you have figured out the kind of heavy equipment you need to add to your operation, it is necessary to consider whether you would benefit more from buying or renting it. 

In certain scenarios, it might be more logical to purchase the equipment. However, there are several different ways that you can benefit from an excavator rental. The following are some of the biggest advantages of renting heavy equipment instead of buying it:

1. Avoid a significant upfront investment

When you are purchasing a new piece of heavy equipment, it almost always requires a large upfront investment, as heavy equipment can be quite costly, and it could take a few good years to save up the amount of capital required to make such an investment. 

If you do decide to make that investment and purchase equipment, a significant amount of your company’s money will be tied up until you sell it, and when that time does come, you will likely get a lot less than your initial investment. 

However, when you decide to rent equipment, you do not have to stress about saving up enough for the massive upfront investment, and you do not need to worry about having so much money tied up for so long.

2. Save on taxes

There are many different factors that come into play with regard to a business’ tax return. However, in most cases, renting equipment (rather than buying it) can offer you a major advantage when tax time comes around.

That is because, in most cases, a rental expense is deductible, while you must pay taxes at a depreciated rate on purchased equipment, which continues over the equipment’s lifetime. Sometimes, rental costs are viewed as project expenses, or they may have a certain kind of tax benefit available because of the nature of certain kinds of businesses.

3. Maintain strong borrowing power

If your business ever requires a loan from the bank, you will find that they will view your rented equipment and purchased equipment in very different ways. Usually, banks do not see excavator rental expenses as a liability on a balance sheet, which means that if you rent your equipment, you can maintain stronger borrowing power.

On the other hand, capital equipment debt or owning an aging piece of heavy equipment could negatively impact your business’s overall financial picture, depending on the circumstances.

4. Avoid long-term commitments

Purchasing heavy equipment comes with many long-term responsibilities, which include tracking warranties, making service-contract decisions, and discerning financing options and interest rates, among several other matters.

Keeping up with all of these obligations, as well as others like the equipment’s maintenance, servicing, eventual sale or disposal, upgrades, and adherence to rules and regulations, can be overwhelming and can induce unnecessary anxiety and stress. 

However, all of these long-term responsibilities and commitments, and the stress that comes with them, can be avoided when you decide to rent your equipment instead.

5. Gain flexibility

Flexibility is necessary during major recessions when profit margins are razor thin, regulations are in constant flux, markets are volatile, and there is a growing demand for specialized capabilities. All of these factors are either currently at play or are on the horizon.

Tying up your company’s capital in the purchase of a piece of equipment reduces your flexibility. However, opting for a rental agreement instead has the opposite effect and enables your company to respond to financial fluctuations, specialty niches, and the constant changes in demand. 

If significant changes occur in any of these areas, you will have the ability to simply stop renting certain equipment, or to rent more of it if necessary, making your business much more adaptable.

How Great West Equipment Can Help You Rent the Heavy Machinery You Need

If you would like to reap the many advantages that come from renting heavy equipment, Great West Equipment has a large range of different types of machinery that are available for rent.

Whether you need an excavator rental, a loader rental, a compactor rental, or any other kind of heavy machinery, we can help you meet your needs by offering top-quality equipment and fair rental agreements that meet your requirements. With our equipment rentals, you can gain the power, productivity, efficiency, and flexibility you need while working within your budget. 

All of the equipment that we have for rent has been regularly serviced and maintained by our team of experts to ensure that it is in top condition. If you ever encounter any issues with our equipment during your rental period, we also have a dedicated team that will address those problems promptly and efficiently. We will also gladly arrange equipment hauls so that you can have the machinery you need delivered directly to your job site.

For more information about our rental agreements or to learn more about our rental rates for various types of equipment, call Great West Equipment at 1-833-730-0613 or contact us here.