Heavy Equipment And Other Construction Plant Equipment Buy or Lease Decisions
Determining the best buy or lease solution for new construction plant equipment involves careful evaluation of your company’s current state of affairs. It’s not just a matter of needs, growth, financial position and goals. Immediate needs may press you toward leasing rather than buying. However, long-term expectations may press toward a decision to own rather than rent. So you move with care, considering not only the immediate costs of leasing versus buying, but also the long-term expenses such as:
- The cost of routine heavy equipment maintenance
- The savings, or loss thereof, in tax deductions
- Operating flexibility
- Losses due to equipment deprecation
- Current base equipment budget versus projected base equipment budget
- Ease of access
- Expected daily demand for any particular time of construction plant equipment
- A comparison of cost-benefit against cost-deficiencies
- AND So much more.
Note: The following content is not limited to vehicles, trucks and tractors. Rather they reflect the buy-versus-lease options associated with all types of construction plant equipment.
Buy or Lease Construction Plant Heavy Equipment Simplified
Perhaps the word, “simplified” seems a bit out of place when dealing with such an important decision. Yet although we cannot make the decision simple, we can simplify the basic pros and cons of leasing versus buying construction plant equipment. We will keep it short and sweet.
Benefits of Leasing Construction Equipment
Lacking space for addressing the distinctions in types of leasing, we recommend that you read the Federal Reserve paper, "Keys to Vehicle Leasing" Now look at the simplified parts of leasing equipment.
Conserve Capital – Typically, heavy construction equipment lease agreements come in with lower monthly payments than those associated with an outright product purchase. Thus for a period of time, your company retains more capital for other goals and projects.
Reduced Operating Expenses – The option for less costly access to newer equipment drives the heart of leasing over purchasing. This means better fuel efficiency, less down time, and a reduction in maintenance requirements.
Favorable Bank Balance – Leasing often impacts your company’s debt-to-equity ratio by enabling you to off-balance the expense. Prospective clients tend to smile on companies with the most favorable bank balance.
Reduction In Administration Paperwork – It’s simple: Leasing your heavy equipment eliminates paperwork associated with property taxes, tags, titles, licensing and more.
Newer Vehicles Enable Flexible Equipment Upgrade Policy – Leasing enables your company with the opportunity for routine equipment replacement at lower costs and liabilities.
Benefits of Buying Construction Plant Equipment
You know from the outskirt that buying typically requires a long-term investment whereas leasing is designed for short-term benefits. Thus leasing construction plant heavy equipment is only beneficial as an initial savings. Here are some other benefits of buying over leasing:
Pricing Leveraging – An outright purchase of construction plant equipment nearly always wins a better price over leasing. Payments may be higher than a lease deal, but negotiations nearly always win a better end deal.
No Lease-Related Limitations – You own it. Thus there are no lease-related restrictions on wear, tear or mileage.
Flexibility of Disposal – Eliminate lease-related asset-possession timetables. Drop, keep or resale your construction equipment assets without additional penalties.
Regulated Depreciation Control – Although you cannot eliminate the cost of construction equipment depreciation, you can avoid some of the lease-related specifics. Also, ownership means your company rather than the lease company will reap any depreciation-related tax write-offs.
Accumulated Equipment Equity – When leasing, all accumulated equipment equity remains with the lessor. Buying accumulated construction plant equipment equity at your disposal.
Assignar – Manage Leased or Purchased Construction Heavy Equipment Processing
Whether you go with leasing or with buying, you still need an efficient and reliable method for processing construction plant equipment management. The Assignar workforce and asset allocation and planning software can simply the operations, the tracking, and the paperwork. Give us a try. Construction contractors use Assignar to promote better construction equipment durability, lifespan and reliability.