How Leasing Construction Equipment can Save Money
In the minds of some, leases are not cost effective and end up setting you back more over the long term. While this may be true of payments made in perpetuity, leasing construction equipment can end up costing a lot less than buying expensive machinery. By limiting the amount of money spent upfront and allowing for upgrades as the equipment depreciates, the option of leasing makes a lot of sense for small construction companies.
No Down Payment
In many cases, a company will need to acquire equipment for work that hasn’t yet been paid for. Paying thousands of dollars up front when you’re still months away from payment can seriously restrict your cash flow. Leases typically don’t require a down payment and are designed to get equipment to lessees relatively quickly so that companies can get to work. This strategy is always helpful with regards to keeping working capital moving; it’s even more helpful when the assets are only going to be used for a short period of time.
If you have a project that requires a very specific rig that you’ll only use for a month or two, buying that equipment will be a huge waste of money. Leasing construction equipment often allows you to work out a short-term lease that will only cover the extent of the project. This saves you not only the money you’d spend on a down payment, but also all of the expenses associated with caring for and storing equipment after it’s been used. Ownership doesn’t account for when machinery will and will not be needed – you simply own something or you don’t. A lease can actually factor in your schedule and projects.
Option to Upgrade
One of the main reasons you should consider leasing instead of buying is the high probability that the equipment you purchase today will be outdated tomorrow. New models are constantly being made available and you may find yourself unable to get what you need if you just spent too much on something that’s already replaceable. Leasing construction equipment eliminates the potential for this problem with the option to upgrade often being built in to the lease. If better machinery becomes available or what you have stops fulfilling a need, you’ll be able to exchange the old instrument and get back to work.
When getting new equipment, your objective should be acquiring what you need at a price you can afford. Leasing makes both of these attainable, while purchasing might not accomplish either one.