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Why It Might Not Be a Good Idea to Buy Your Construction Equipment

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In the construction and renovation industry, workers are only as good as their tools, which may include construction equipment such as grapples, digger buckets, bulldozers, diggers, scissor lifts, and grabs. Using such equipment, a construction worker can perform tasks that would normally take a dozen or so workers to accomplish.

Construction equipment financing

However, not all construction equipment is created equally, and a construction company must have the right tools available at a moment’s notice if they are to fulfill work orders and meet tight deadlines.

As such, the million-dollar question becomes a matter of deciding if leasing or buying construction equipment is the right move. We will look into construction equipment financing in Canada and assess the pros and cons of leasing versus buying construction equipment.

Advantages and Disadvantages of Purchasing Your Construction Equipment

If a contractor or a construction company has the capital available, it may be in their best interest to buy their equipment outright. By doing so, convenience, availability, and other such issues become a thing of the past, given that the construction equipment will be available whenever and wherever it is needed without any downtime to worry about.

Moreover, your equipment operators may be able to learn and eventually master a specific device instead of having to deal with the intricacies and quirks of a myriad of different machines, which may prove to be impossible or overwhelming at the very least.

The result is that your operators will become happier and more productive than before, which will also subsequently augment your enterprise’s bottom line.

However, we should reiterate that capital is key, as buying construction equipment also means that you will need to handle all repair and maintenance costs should the machine break down or require repairs due to overuse or simple wear and tear.

The individual (or company) will also be held responsible for storage and all transportation of said equipment. You need to consider other costs beyond the initial purchase price of the construction equipment, such as transportation, maintenance, and storage expenditures.

Advantages and Disadvantages of Leasing Your Construction Equipment

If you are a contractor or own a construction company with a sporadic workload, then we would recommend that you take the leasing route instead of the purchasing route. Leasing is the ideal solution for companies with sporadic workloads because it is the more cost-effective of the two options.

In this case, your company will not have to worry about paying for any maintenance that the construction equipment will need down the road, nor will you have to worry about transporting the equipment to a designated job site.

In addition, you won’t have to worry about where to store the construction equipment during downtime. All of the issues mentioned above become non-issues when you opt for leasing. Your leasing company will be held responsible for all transportation, maintenance, and storage of the construction equipment that you lease.

Another significant advantage of leasing over buying is that there is a vast array of construction equipment available on the market. As such, by deciding to lease, you will only need to lease the equipment needed to perform a particular job or project, which is far more economical than buying a plethora of different machines at once or even over time.

However, with time, the cost of leasing will begin to accumulate, which is something you will need to consider if you plan on expanding your company in the future. Another issue that may occur occasionally is having to wait for a particular piece of equipment to be available for a given project, as some devices may be in high demand during certain times of the year.

Furthermore, you may feel some pressure to finish a project within a certain timeframe, as exceeding said timeframe may lead to additional leasing costs, or you may even need to return the equipment before completing your task if you far exceed the leasing term.

There are also some companies that are more style than substance, so you need to be wary of those that promise the world, but provide subpar service in practice. Fortunately, most companies are honest, transparent, and legitimate, so you shouldn’t have issues finding a bonded, licensed, and reputable construction leasing company with a proven track record.

If in doubt, check online reviews, and look for accredited businesses with the necessary certifications for peace of mind. Asking other trusted partners, affiliates, or friends in the industry for advice may also help steer you in the right direction.

In sum, there are both pros and cons to leasing equipment. Some of the biggest advantages include not having to pay the full amount to access the asset in question, so you won’t have to take out a loan or dive deep into company coffers to operate the machines.

You will also have immediate access to state-of-the-art equipment that uses the latest technology in the industry, which may not be possible if you were to buy the equipment due to the high cost. Finally, you will also be able to deduct the full cost of the equipment rental from your taxable income.

The Truck Loan Center Difference

If you would like to learn more about construction equipment financing in Canada or would like to qualify for construction equipment financing, then please visit our website.

Truck Loan Center specializes in equipment loans, account receivable factoring, small business loans, and construction financing. We can be reached at 1-866-230-0094 for a free, no-obligation quote and consultation if you want to discuss your financing needs (for example, lines of credit, working capital, invoice factoring, and small business loans) in confidence.

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