Renting is a flexible, short-term option, while financing the purchase of heavy equipment is a long-term decision based on an investment in your future business. When deciding whether to buy, rent or lease equipment, you need to consider your business’s current situation and needs and your future plans and goals.

Below are the top factors to consider when choosing between buying, renting or leasing:

Cash Flow and Capital

One of the most critical factors when deciding whether to buy vs. rent or lease heavy equipment is your current financial situation. Purchasing equipment requires an upfront capital investment, typically requiring a down payment or some form of collateral to secure financing. On top of your monthly financing agreement, you’ll also pay an interest charge as well as insurance and other incidental costs.

Renting and leasing require no capital outlay, but they do require you have a steady cash flow to cover the monthly costs or fees throughout the duration of your rental or lease agreement.

Maintenance Levels

Another crucial factor to consider is the level of maintenance you’re willing to commit to. Owning heavy equipment means the responsibility for ongoing maintenance falls on the owner, who can maximize the lifespan of the machine and increase return on investment by keeping up with the proper servicing intervals.

The alternative is to rent or lease your equipment, which requires little to no maintenance responsibility.

Project Duration

When deciding whether to buy or rent construction equipment, the choice comes down to which path makes the most financial sense. Often, a project’s profitability has to do with the size of the project and how long it's expected to take.

Short-term and one-off projects can quickly turn a profit when renting equipment for a short duration. For long-term or frequent projects, financing equipment may help to increase profitability by generating a higher return on investment.

Urgency

How quickly you need to ramp up production plays a key role in the ultimate choice between a construction equipment rental or purchase. With the right rental provider, businesses can acquire the necessary heavy equipment within a short timeframe.

Purchasing equipment may be a longer process, depending on the type of financing and whether you need to source the equipment from another location. Similarly with renting, if you source a specialty piece of equipment, it may not be available immediately if you require it urgently.

Other Resources

Whether you own, rent or lease equipment, there are several related factors to consider beyond direct equipment costs and availability. Heavy equipment requires certain additional resources in both time and money.

Whether you should buy or rent heavy equipment also depends on the following factors:

• Storage: Having the available space to store equipment when needed
• Transportation: Investment in the right trailer and tie-downs
• Operators: Whether you plan to operate the equipment or hire operators
• Insurance: Total cost of insuring financed or leased equipment

The above factors are particularly important to consider if you are considering purchasing equipment, however, some points apply to leasing and renting as well.

Buying construction equipment can be a tremendous business investment with many long-term advantages. Comparing the pros and cons of buying heavy equipment can help you make an informed decision and know what to expect before moving forward with your investment.

The pros of buying heavy equipment include:

• One-time investment: Purchasing heavy equipment requires a one-time upfront investment. Financing equipment allows you to budget your operating expenses consistently without any additional unknown or varying costs.
• Make customizations: Buying equipment allows owners to make any customizations and upgrades they’d like to their equipment. This allows equipment owners to maximize their investment and get the optimal functionality and performance they desire from their machines.
• Add to your business assets: Buying heavy equipment gives your business a new asset to leverage and generate profit from. Equipment ownership also allows businesses to claim certain tax deductions, including depreciation costs, insurance and repair expenses.
• Anytime availability: One of the greatest advantages of equipment ownership is that you always have the equipment available when needed. Owning eliminates the need to wait for a certain piece of equipment to come available or visit multiple rental providers to find the right one.

Some of the cons to consider in buying heavy equipment are:

• Maintenance responsibilities: One of the main disadvantages of owning compared to renting or leasing is that the owner is responsible for keeping up with maintenance. Being proactive with maintenance and servicing protects the equipment’s value, so falling behind on servicing intervals can impact your return on investment at resale.
• Storage needs: Equipment ownership requires having a safe, secure and convenient location to store your machine when not in use on a project. Owners incur the cost of the storage space and must invest time and money into proper storage practices, such as winterizing machines for long-term seasonal storage.
• Transportation resources: Being an equipment owner requires having a way to safely transport your unit to and from job sites. Trailers must comply with your local DMV regulations and be rated for the machine’s load. Equipment owners must also learn how to safely tie down the machine and load and unload it from the trailer.
• Technology updates: The heavy equipment industry is continuously evolving, with new technology features coming onto the market regularly. To access technological advancements, equipment owners will either need to trade in their equipment or invest in technology upgrades should there be an update valuable for their business.

Renting heavy equipment involves partnering with a rental provider that can provide the right type and size of equipment when you need it. When renting heavy equipment, it’s also essential to ensure it’s been well maintained and will remain reliable and perform well throughout your rental term. Because of this, there are some definite pros and cons to be aware of before choosing equipment renting vs. buying.

The following are the top pros of renting heavy equipment:

• Access to equipment: The equipment rental market makes a wide range of machines available and accessible. Renting equipment provides the convenience of getting the right equipment for the job when you need it.
• Lower incidental costs: The primary difference between buying vs. renting construction equipment has to do with the overall costs associated with each option. Renting equipment streamlines many of the costs otherwise associated with ownership. The rental provider is responsible for the maintenance and insurance costs and often provides transportation as a delivery service.
• Maintenance-free usage: One of the biggest advantages of renting is that there’s no need to schedule your preventive maintenance and no downtime when the equipment is in the shop. When renting equipment, the provider also covers the cost should an unexpected breakdown occur or when routine maintenance is required.
• Compliance assurance: Equipment that comes from a reliable provider will be up-to-date with maintenance, making it compliant with your local jurisdiction. This is a significant benefit because it alleviates the responsibility of ensuring equipment meets compliance standards when purchased.

When deciding whether to rent heavy equipment, consider the below cons:

• Higher long-term costs: Rental providers need to cover the costs of their maintenance, storage and insurance fees, therefore, they typically charge a higher daily, weekly or monthly rate than the average lease or financing payment. These higher rates can add up over time for longer-term rentals.
• Uprenting or downrenting risks: If rental providers don’t have the right model available for rent during the desired timeframe, you may run the risk of uprenting a model too big for your project or downrenting one that’s inefficient.
• Scheduling and availability conflicts: When rental providers don’t have the equipment available at the right time, it can delay your project timeline if you need to wait for the right machine to become available locally.
• Unclear maintenance records: When renting heavy equipment, it’s essential to shop around to find a reputable provider with a demonstrated history of keeping excellent maintenance records. If rental equipment isn’t properly maintained, it can lead to costly downtime in productivity.

A heavy equipment lease is a hybrid option between renting and owning. Under a lease agreement, the provider loans their equipment to the lessee for a fixed monthly rate over a set length of time. This allows businesses to secure the equipment they need over a longer term without concern that rental fees may increase or that the rental term is insufficient to get the project done.

Leasing heavy equipment comes with the following pros:

• No down payment: To enter into a lease agreement for heavy equipment, you won’t be required to provide a down payment, giving you the benefits of ownership without the capital investment.
• Cash flow management: Lease agreements allow businesses to better manage their cash flow by having one fixed monthly payment for a set length of time. Consistent monthly overhead expenses give businesses the ability to better plan financially.
• Fixed-term length: Heavy equipment lease agreements are based on a fixed term, typically one, two or five-year terms. Having a set length of time under which you have access to equipment minimizes surprises and provides peace of mind that day-to-day operations are covered during that period.
• End-of-term flexibility: Lease agreements also provide flexible end-of-term options. Businesses and contractors can decide at the end of the lease agreement whether to return the lease, renew it or buy the equipment outright.

Some of the cons associated with heavy equipment leasing include:

• Interest rates: One of the main differences between leasing vs. buying heavy equipment is the amount of interest paid. Typically, interest rates on a lease agreement are higher than on a financing agreement. Businesses could end up paying more in interest on a lease than on a purchase.
• No equity: Under a lease agreement, the heavy equipment doesn’t become an official business asset, so it doesn’t add equity to the business value. Businesses won’t be able to sell the asset at the end of the term to recoup their costs.
• Strict agreements: Lease agreements are strict contracts whereby a business agrees to commit to making payments over a fixed length of time. If business fluctuates during this time, contractors under lease agreements won’t be able to change the type of equipment they’re leasing or the duration of the term without paying a penalty.

Whether you’re looking to buy, lease or rent heavy equipment, you need to make sure you partner with the right equipment provider. Cat® dealers are professional and reliable providers of high-performing heavy equipment. With a wide selection of types and models to choose from and convenient purchase, leasing and rental options, the Cat dealer near you can help you access the right equipment for your business.

Below are some of the top reasons to choose a Cat dealer for your heavy equipment:

• High-performance equipment: Cat dealers are known for their reputation of providing equipment made and maintained up to the highest performance standards. By providing durable machines, Cat dealers offer clients excellent productivity with equipment that will perform for thousands of working hours.
• In-depth inspections: Heavy equipment is complex machinery that needs to be thoroughly examined and serviced appropriately to ensure it performs at optimal levels. Whether you lease or rent equipment or buy a used machine, you can rest assured the machine you’re selecting has undergone an in-depth inspection.
• Expert knowledge: Your local Cat dealer is owned, operated and staffed by experts in the field. When you work with your local Cat dealer, you can depend on the equipment representatives to help you find, select and operate the equipment you need. Working with a Cat dealer also ensures you get ongoing support from the Cat team.
• Genuine parts: Equipment purchased, rented or leased from a Cat dealer adheres to specific standards of maintenance and servicing, including being repaired using genuine Cat parts. Caterpillar-trained technicians service equipment using Cat parts to guarantee the best possible performance.
• Availability and inventory selection: Cat dealers belong to an extensive network all working together to provide one of the most reliable distribution systems in the industry. This allows contractors and business owners to receive the best possible value from Cat products and services.

When you’re looking to purchase used equipment, choose Cat Used for one of the largest online inventories of preowned heavy equipment. Cat Certified Used equipment is serviced and inspected to the highest market standards, providing you with optimal value for your investment. When you purchase used equipment on Cat Used, you’ll benefit from a convenient search function to find and locate the equipment you need and receive support and maintenance from a trusted source.

Explore Cat Certified Used equipment and shop all used equipment online. For help finding specific equipment, contact a local Cat dealer near you today.