Renting vs Buying Equipment: Pros & Cons

 

If you’re using construction equipment, you’ve probably wondered: “is renting equipment better than buying new or used?” Whatever your reason for using construction equipment is, you should always evaluate your current situation. Cost might be the #1 factor most people look at, but there are other pros and cons of renting and purchasing equipment. 

 

Renting

Pros:

• 1. Renting assures you’re never stuck with outdated equipment or technology. If your business’s efficiency is dependent on the latest and greatest model of equipment, renting allows you to always have the newest model. 
  2. Renting is less expensive up-front. Rather than one lump sum to purchase the equipment, you have predictable payments for each day, week, or month. These payments can make it easier to budget for the equipment over time. 
  3. Renting offers you more flexibility. If you decide you need a skid steer instead of a mini excavator, you can easily make changes. 
  4. Renting is often 100% tax deductible as an operation expense under the 179 IRS Tax Code. 
  5. Renting has fewer maintenance costs. If something breaks or issues emerge from normal wear and tear, the rental company is usually responsible for maintenance.

 Cons:

• 1. Over time, renting can be more expensive than purchasing equipment. If you are using a piece of equipment every day for months or even years, you can rack up a higher bill renting than purchasing. 
  2. Renting equipment gives you zero equity. For frequently used equipment, you are paying a company for the rental and not paying for the machine itself. There is no potential to make money back at the end of a rental term. 
  3. The terms of your rental could be longer than you need the machine. A strict contract could leave you with equipment for longer than it’s needed. It can sit on your jobsite until the end of the rental term, costing you money and taking up space. 
  4. Specific equipment may not be available when you need it. 

Buying

Pros:

• 1. Owning your equipment means you can make any modifications to your machines. You can schedule regular preventative maintenance, which can keep your machine from breaking down as often. You may have less downtime overall.
  2. Buying equipment means there are no agreements and contracts with a rental company. You decide what type of equipment you want, make the purchase, and then it’s yours to use on your terms.
  3. Owned equipment can be sold at the end of its use. You can recover some of the cost because you’ve built equity in it.
  4. You aren’t limited by what’s available at a leasing company. If you have a specific model or brand in mind, you can purchase it.

Cons:

• 1. You will have a higher initial cost when purchasing, especially compared to the lower monthly payments for rental equipment.
  2. Owned equipment will eventually fall behind technologically. Newer options will hit the market, so you’ll have to decide whether to repair and upgrade or sell your equipment.
  3. You’ll be fully responsible for all maintenance on your owned equipment. Keeping up with preventative maintenance is vital. If your machine breaks down, you’ll be covering the cost of the repairs, which might be too expensive. Be sure to look out for any product warranties available.

 

We proudly sell, rent, and service equipment and would be happy to assist you. If you have any questions regarding renting or purchasing, contact a Hugg & Hall branch in your area to speak with one of our Equipment Specialists! 

Editor’s Note: This post was originally published in September 2017. We updated it for freshness, accuracy, and comprehensiveness in March 2023.