Renting vs Buying Construction Equipment
(Click to Enlarge)

To complete their construction projects, construction companies usually have the option to either rent or buy the necessary equipment. The decision to buy vs. rent construction equipment is important, as it will impact the project’s management, budget, and construction plans. The decision also depends on the complexity and scope of the project itself.

Depending on the company’s short- and long-term construction goals, renting and buying each has its own advantages and disadvantages. This post outlines the benefits of renting equipment and when it’s best to buy. 

Benefits of Renting Construction Equipment

Renting construction equipment has become popular among construction companies. The benefits of renting include: 

Low Upfront Costs

Businesses prefer to rent construction equipment to avoid high upfront costs. Buying tools means they’ll be required to pay more upfront, which affects budgeting, especially if it’s a small company with little capital. 

No Maintenance Costs

Renting equipment ensures companies won’t be responsible for repair or maintenance costs. Renting heavy machinery like trucks and cranes is especially cost-effective because they are only used sparingly in most projects.

Eliminates Unnecessary Purchases

Renting eliminates unnecessary purchases, as a company can conveniently choose what they need depending on each project. For example, a contractor can rent a compact excavator if they are working in small spaces or multiple locations.

No Extra Storage Cost

Storage costs and services for large construction equipment may be too expensive for companies to sustain in the short and long term. Rental options allow you to avoid these extra storage and transportation costs. 

No Long-Term Losses

The value of construction equipment reduces over time, and buying may present a challenge if you decide to cash in later. As long as the construction equipment is used regularly, its worth will depreciate. Rental equipment depreciates, but you won’t incur any loss of value since you’re only renting it. 

Rent-To-Own Construction Equipment

Renting presents an opportunity to try a product before buying it in a rent-to-own agreement. Renting equipment allows companies to observe how viable it is for their projects, test its functionality, and use it as they finance its purchase. Rent-to-own heavy equipment may be preferable to the upfront purchase of equipment due to the flexibility it affords. 

Lowers the Market Entry Barrier

New or small companies in the construction market can still get big projects by renting the equipment they need. Not all companies are eligible for large-scale construction projects because they lack the necessary equipment, and renting provides easy access to all tools. 

Benefits of Buying Construction Equipment

Some construction companies may prefer to own their construction equipment instead of renting. Some of the benefits of buying equipment include:

Long-Term Cost-Effectiveness

Over the long term, buying heavy equipment is more cost-effective than renting, despite the high upfront costs. Renting means a company regularly pays to access its services, and projects may stall if the waiting period to use the tools is long. 

Tax Benefits

Buying presents potential tax benefits that cannot be fully leveraged through renting. Companies can deduct equipment depreciation and loan interest.

Convenience of Ownership

When you own your equipment, you can use, sell, rent, or trade it at any time. While renting presents a flexible option to access equipment, their availability may heavily depend on the demand from other renters. 

Crucial for Large-Scale Projects

Buying equipment ensures businesses are well-positioned for any large-scale projects. Investing in and regularly using large equipment like bulldozers and excavators, as well as specialized equipment, can help companies save on costs throughout these longer-term projects.

When It Makes Sense to Buy Construction Equipment

Renting construction equipment is a viable option for many companies, especially when considering factors like upfront costs, depreciating value, and storage costs. However, there are times when buying equipment would be a better option overall. These include when: 

  • The equipment will be regularly used: If the equipment will be used often, then it’s best to pursue the purchase option. As a general rule of thumb, if the equipment is used more than 65% of the time, you should buy it. For construction excavators, it’s a good idea to purchase one if it will be used more than 175 hours a year.
  • Handling long-term projects: Buying is also a more cost-effective, convenient option if a business is looking at a long-term construction project. Long-term projects require flexibility and consistent utilization of equipment. Renting confines the user and may stall the project, depending on the demand for the rental equipment. 
  • Specialized construction equipment is needed: Specialized equipment may be even less available for rental, causing significant project delays. Buying specialized construction equipment is better than renting especially if they’ll be needed frequently. 

Rental Construction Equipment From Central Diesel

Deciding to buy vs. rent construction equipment depends on the company’s current construction projects, budget, and long-term plans. Renting allows businesses to avoid high upfront and maintenance costs, while buying construction equipment is a more convenient, cost-effective long-term option in certain cases, such as for large-scale projects. 

Central Diesel has more than 50 years of experience offering diesel engines and other products to the construction industry. Our equipment is designed to reduce emissions and fuel consumption while providing optimal power to construction equipment. Our dedicated service has enabled us to serve more than 4,000 clients across various industries. To learn more about buying and renting construction equipment and which option best fits your needs, contact us today.  

Leave a Reply

Your email address will not be published. Required fields are marked *