Thinking of renting construction equipment but unsure if you’re going to need it long-term? There are many different questions contractors would be asking themselves before they enter into any contract on equipment.
Rent-to-buy equipment should always feature as an option.
With that, here are 6 advantages of rent-to-buy that you should consider next time you’re faced with a decision on financing equipment for a job.
But first – understand the advantages of leasing.
When you look at leasing equipment, many of the advantages translate over to when you go for a rent-to-buy contract. As opposed to renting, where rates are usually higher for shorter time spans, leasing gives you the advantage of lower rates over a longer period. This can be useful if you plan on using your equipment for multiple jobs in a longer timeframe.
What are the advantages of renting to buy equipment?
For contractors, it’s the work that dictates your day-to-day equipment needs. Your workflow may change with every season, perhaps every month. Knowing what your equipment needs are in 6 months is basically as unpredictable as the workload itself.
That’s where rent-to-buy comes in. Here are some advantages to think about:
1. Avoid large upfront payments
In rent-to-buy contracts, a portion of the rental price is put toward the final purchase price. This means you end up paying less upfront not only at the start – but also your final buy-out price will be far lower than if you went in to buy outright. While different suppliers will have their own terms and conditions – especially regarding interest, the basics are usually the same. Contractors looking to gain access to equipment without having to fork out large sums or be weighed down by larger loans should take advantage of rent-to-buy schemes.
2. Pay off equipment while you’re using it
Instead of renting equipment and then handing it back, rent to buy offers contractors the opportunity to invest in their long-term productivity and capability by paying off equipment while they use it on the job. For contractors new to the game, and who want to invest in their own future, rent-to by schemes offer more flexibility and opportunity over the long term.
3. Get access to the latest equipment
It’s not often that contractors will opt-in for the latest and greatest equipment when considering a buy. For budgetary reasons, you might prefer to go with older models that you’re more familiar with and you know can do the job well. Rent-to-buy takes off the heat and allows you to test the latest equipment without the upfront costs of financing a brand-new machine. For contractors who work to tight schedules and require accurate tools for the job, testing the latest equipment and making informed purchase decisions down the line is often much more feasible.
4. Lower the amount you need to finance
One of the main advantages of rent-to-buy schemes is the amount you need to raise in finance.
Think about this:
- You’ve got your eye on a piece of equipment that costs $50,000.
- You can produce $30,000 upfront but are lacking the extra $20,000.
- You enter into a rent-to-buy contract and start using your equipment on the job.
- Every time you pay rent on your equipment – some of that (let’s say a total of $20,000) goes towards your purchase.
- Now your job is over, and your next one is lined up. You decide to buy and you’ve got the right amount sitting there to make it happen.
5. Allow you to test the equipment on the job
Rent-to-buy gives you the unique advantage to test equipment before making the decision on whether to buy. Instead of renting a like-model and deciding a year later that you want to buy the machine outright, you can actually test the equipment in real life and take note of productivity and costs as you go. You may also decide to wait for a newer model to come out before you start your contract, and compare previous operations with the new equipment and decide based on your budget and expected return.
6. Better flexibility on a long-term investment
Whether you’re a startup in landscaping, utilities, or a long-term player in construction, rent-to-buy plans offer enormous flexibility in terms of managing credit, financing, and loans. With the ability to keep up your workflow and with the added bonus of lower purchase costs at the end, you can grow and expand your business without the hassle of committing upfront to the equipment you may not even find productive.
On the search for rent to buy equipment in Western Australia or the Northern Territory? With multiple suppliers offering high-grade equipment at affordable and flexible rates, find your nearest supplier and ask about rent-to-buy schemes today.
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