Meeting your company’s needs: Should you buy, rent or lease your heavy equipment?

If you own or operate a business that needs heavy equipment to run, then you’re faced with a tough decision every time you need replace one of your machines. Do you rent, buy or lease that piece of equipment?

In reality, the answer really depends on the needs of your company. All three ways have their pros and cons and the answer you decide on may involve more than just budgetary concerns (although you’d be forgiven if that’s your biggest concern!). Here’s a short guide to all three ways you can get a new piece of heavy equipment quickly so you can keep on doing the jobs that keep your company moving forward.

Buying equipment

Often, this is the first thing that you may think of when it’s time to replace one of your pieces of equipment, and for good reason. When you buy a piece of equipment, you get to choose all of the bells and whistles that you want and you get to own it for as long as you want so you can get the most out of it.

Owning also means that the equipment is there whenever you need it. Your operators can gain a greater knowledge and familiarization with it because they will always be working with the same machine. This is good because it cuts down on training time so you can get jobs finished quickly once every is familiar with it.

There are two big concerns when buying equipment however: you deplete your cash flow and you have to maintain the equipment. While there are companies like out there who can help you keep your repair cost low, the hit to your cash reserves may give you pause, especially for more expensive pieces of equipment. In such cases, getting an equipment loan so you can buy equipment without hurting your cash reserves might be the best solution.

Renting equipment

Another option for getting heavy equipment is to rent it. When you think about it, this gives you and your company a great amount of flexibility: you still get to choose the piece of equipment you want, but you don’t have to worry about any upkeep costs. Just use it until you’re finished the job and send it back.

Renting is also a great option if you have a short one-off job to do and don’t want to buy equipment that you may not need again for awhile. You can usually choose your rental times as well, from daily to weekly, so you get a lot of flexibility if a job goes longer than expected.

The biggest downfall to renting is cost. You’ll usually pay a rental fee that’s greater than a monthly loan or lease payment, so you may not feel comfortable forking over more cash, especially on a longer job. You’ll also need to take equipment availability into account, because the rental company may only have one piece of certain equipment, which may leave you with nothing.

Leasing equipment

The final option for getting the equipment you need is to lease it. Leases are a lot like owning, except you only own the equipment for a certain amount of time before you return it. In a way, leasing can be looked at like an in-between of renting and buying.

On the one hand, the equipment is yours for the duration of the lease, but you’re still making monthly payments without anything to show for it after the lease it up. Another plus is that you can get a newer model every few years so you never fall behind on technology.

There is one big concern with leasing: the possible penalties. If you break the lease terms for whatever reason, you will lose the equipment and still have to pay the full amount of the leasing terms. This can be brutal because you’ll lose cash and still have to find a way to replace the equipment.

Which one’s right for you?

Again, the one way that works best for you will be determined by a few factors. How much cash does the company have on hand? Is the piece of equipment something that the company will use in the future? How long is the job that you need the equipment for going to last? The answers to questions like these will determine the best route for your company. If you take the time to think about questions like these, the answer should be apparent in time.

There are several ways to find new heavy equipment for your company. Decide what the equipment will be needed for and how often and you’ll be able to make the right decision.

Taylor Dawson runs a small manufacturing plant and is always looking for ways to save money while keeping quality high. When he finds something helpful, he loves to share it by posting on business and B2B blogs.