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Factors to Consider When Renting vs Buying Construction Equipment

November 18th, 2021


When you need a new piece of construction equipment for an upcoming job, the big question is whether you should rent it or buy it. This is a complicated question, and there are a lot of factors to consider. Here are some of the big ones you need to keep in mind before making this decision.

How Much Will You Use It?

The place to start with any piece of construction equipment for sale or rent is deciding how much you will use it. If you don’t think you will use it very much, in general it’s better to find the construction equipment for rent. The more you’ll use it, the better it is to buy it.

This isn’t always easy. There are many machines that you’ve been getting by perfectly fine without, but when you have them, you’ll find they make every job easier and become your new go-to solution. You might be thinking you want to choose that excavator for rent, but once you have it, you find it’s a much better solution than the backhoe that’s been your go-to tool, and you’ll wish you’d chosen the excavator for sale.

If you can, talk to people on other crews and see how much they use this or that piece of equipment. Get them to tell you details so you can get a sense of how you might use them differently than they do.

Once you’ve got what you think is a good estimate of how much you’ll use the equipment, you can do some math. Multiply the cost of rental times the number of uses, then compare that to the purchase price. Don’t forget the savings you might get from used construction equipment for sale or the possibility of a rent-to-purchase option (RPO) as one cost possibility for buying.  This gives you your starting cost consideration.

Where Will You Store It?

That wheel loader for rent can be stored on the rental lot, but if you buy the wheel loader for sale, you have to find a place to put it. Maybe you still have a little room in your yard or know a place you can put this construction equipment for free.

But if you have to rent space to store it, factor that into the cost.

What Will Transportation Cost?

You also have to get your equipment to the job site. With an excavator for rent, they might supply you with a transportation solution, like a trailer or maybe even deliver it for a set cost.

But if you will have to transport the construction equipment, you have to factor in that cost, too. Some things, like wheel loaders, you might be able to drive to the site, but excavators and dozers you will need to transport somehow, either buying a trailer and/or truck or renting one. Depending on your options, the transportation costs might be similar, but they might not.

Can You Get More Work with the Construction Equipment?

Sometimes, owning a piece of construction equipment can help you bid and win more jobs. It might make you more efficient or make you able to start work sooner than someone who doesn’t have the equipment on-hand.

Availability makes a big difference here. If the machine you’re considering is always available in the rental yard, maybe buying isn’t so much an issue, but if it seems they’re all rented out regularly, it might be better to own, so you know what you have. Running around at the last minute to find rental equipment can be nerve-wracking, and trying to make do without can be bad for you. If you don’t have the right tools, it can lead to delays and lower quality work.

Is Maintenance Expensive?

You must factor maintenance into the cost to buy. Once you own the machine, you need to make sure it’s kept in working condition. If you rent the machine, the rental company takes care of maintenance (hopefully – it’s worth taking note when a particular piece of equipment tends to be sorely abused and worn out when you rent it).

Financial Factors to Consider When Renting or Buying Construction Equipment

There are a few other financial factors to consider when renting or buying construction equipment.

Can You Afford to Buy?

Buying construction equipment is a big financial commitment, so you must factor in whether that’s really an option with your cash reserves and credit availability.

Can You Bill It to the Job?

Sometimes you can control the cost of buying or renting by billing it to the job. If you can always manage to build the rental cost into the job bid, then renting might make sense, but other times you can bill enough of the cost to buy that that is a better decision.

Tax Deductions

There are some pretty good tax incentives built in for buying heavy equipment. Maybe you’ve done this before and have a good sense what they are. If not, talk to your accountant about how much you might benefit on taxes for renting vs. buying construction equipment, including depreciation and the like.

Rental and Resale Value

If you own equipment, you might be able to rent it out yourself, especially if it’s something that’s always in demand, like a wheel loader for rent. You should also consider what the resale value might be like.

Get a Quote

With all these factors in mind, all you need now are some hard numbers. To get those numbers, you need to get some quotes on construction equipment for rent or sale. Please call 800-883-9284 or use our online form to get a quote for construction equipment at Power Equipment Company, serving customers in Colorado, Wyoming, and New Mexico.