Buy or Lease Heavy Equipment? Many businesses are left with a difficult decision when it comes to their heavy equipment needs: to purchase the equipment outright or choose heavy equipment leasing instead is what it often comes to. For any company to be successful, you must have access to equipment when you need it. In recent years, companies are opting for leasing their equipment as opposed to purchasing. So, why is this the case, and what are some of the main differences when it comes to equipment leasing and purchasing?
When Should a Company Purchase Heavy Equipment?
If a company or contractor has the capital to spare, purchasing equipment might be the right choice. The benefit of doing this means that as a company, they have constant availability of equipment and machines are ready to be used at any time.
Purchasing, instead of equipment leasing, can also benefit your employees and operators as they will be able to learn and master the operations of a specific machine, rather than learning a new model every few months. This can lead to a greater level of productivity if the operator feels comfortable with the machinery.
After a machine is purchased, the business is then responsible for everything from transportation and storage to maintenance and repair, which when applied to heavy equipment can become incredibly expensive. The initial cost should not be viewed as the final payment as there can be a host of other payments involved when owning equipment.
One other important factor to consider is the project length or how frequently the equipment will be used. If you are planning on using the equipment every day until the end of its life, purchasing equipment will be wise for your company.
When Should a Company Utilize Heavy Equipment Leasing?
As previously mentioned when it comes to deciding whether to Buy or Lease Heavy Equipment, buying heavy equipment can be incredibly expensive, especially if you do not have the budget available. While the equipment may be essential, tying up large amounts of capital into one small section of your business can have ramifications that ripple throughout your entire company. Heavy equipment leasing can provide a lifeline for cash-strapped businesses in need of equipment.
Equipment leasing is where an organization, such as a bank, leasing company, or equipment manufacturer, rents equipment to the business for a low monthly rate for a specified duration. Leasing equipment can help you better manage your cash flow, because there is less expense upfront and you have a predictable payment every month, making it easy to budget over the long term.
When it comes to deciding between heavy equipment leasing and purchasing, you first need to assess your company’s current situation and growth plans, and evaluate the method which will benefit your business more. If your capital is limited or you need equipment that needs to be upgraded every few years, then heavy equipment leasing will be beneficial to your business. However, if you’re an established business or your equipment has a long usable life, then purchasing equipment may be a better option. Reach out to an equipment leasing company to learn more about the different financing options.
Author Bio – Tom Haug is the Director of Construction, Material Handling and Manufacturing in Meridian Leasing.