There are several factors to consider when deciding to purchase or rent equipment. One factor that may be forefront in a company’s mind is price. Renting can be a way to obtain equipment without the need to spend extra capital. In the short-term, renting can be a great way to save money. However, for long-term projects, rental costs can add up quickly. If equipment were needed for a longer period than what it would take rental costs to equal the purchase cost, investing would be the better cost-saving option.
Renting equipment also offers flexibility. Most rental companies offer daily, weekly and monthly rates. Many companies prefer this method so they do not have to pay for equipment they do not use all the time. Contractors may also be hesitant to make such a large purchase. By renting equipment, it also frees the company from having to do costly repairs.
One of the downsides of renting is that the cost to rent is typically higher than a lease or loan payment. A company will also need to take into account availability of the equipment. They should make plans with a rental company well in advance to ensure that the company can have the equipment when needed to avoid downtime.
If a business finds they are using a certain piece of equipment all the time and they have the resources and means to store and maintain it effectively, purchasing will likely save that company money. If equipment is used infrequently or the business does not have the means to maintain the equipment properly, then renting can be a great option.
By purchasing equipment, the initial upfront cost is typically higher because of a down payment, but monthly payments are usually lower than if a company were to lease due to lower interest rates. When buying equipment, it is important to consider the resale value should a company decide to trade it in or decide to get rid of it.
Another factor that needs to be considered is product specification. Rental companies generally have a wide selection of makes and models to choose from which gives companies the opportunity to try out different equipment. Most rental companies also carry the current model year of equipment meaning a company can use the latest and greatest that manufacturers have to offer. Depending on the project, a company would also have the flexibility to choose specialty equipment based on the project, so they always get the best product for the job.
Rent-to-own options are also a way to have flexible payment while still acquiring the equipment. Usually, a portion of rent payments will go toward the purchase of the equipment. A company who goes this route will agree to rent the equipment for a specific amount of time before buying it when the lease expires.