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Posted: 11/11/2015

Rent or Buy: 10 Things You Need to Know

Bobcat compact excavator lifts dirt with bucket attachment.

Considering whether to rent or buy a compact excavator or compact track loader? There are several factors to help you decide whether buying or renting compact equipment makes the most sense, including jobsite needs, attachment versatility and — of course — capital resources.

Jobsite needs

1. Look at the scope of work for your project. Are the length of the contract and the volume of work large enough to support a purchase? Or is the need for compact equipment based on a short-term project?

2. Ask yourself: Are you doing more rework and remodeling projects? If so, consider buying a machine that has a smaller footprint to get into tight areas. But if you do minimal remodeling projects and only need an excavator or loader a few times a year, then renting may be your best option.

3. Evaluate terrain and soil conditions — they may provide the most compelling reason to rent or own. If you typically work on one type of terrain but won a bid for a project in different terrain, then consider the equipment rental that works most efficiently in that soil type.

4. Track machine usage and demand. Although projects are varied and less predictable in some construction applications, tracking a machine’s usage and demand at multiple jobsites could help support buying a machine to meet your long-term needs.

Attachment versatility

One of the greatest advantages of compact equipment attachments is their ability to expand the capabilities of existing machines without requiring a large cash investment.

1. Focus on tools that will provide the best return on investment in the shortest time frame at the least possible cost. If you already own a compact track loader or a compact excavator, then a new attachment should position your operation to offer new services. Renting an attachment for one or more machines can improve project control and allow you to find new revenue sources.

2. Consider delivery costs and scheduling hassles. If you rent the same attachment several times, you may find that it does not make financial sense to have the rental company deliver it to your jobsite, especially if the site is hard to access or scheduling makes it hard to get it on time. In this case, you may be better off purchasing the equipment.

Capital resources

Remember, timing is everything. Determining the right time to rent or to buy is a business decision — one that is based on overall equipment needs, cash flow, cash reserves and the availability of financing from manufacturers or conventional lending institutions.

Explore new financing options. There’s growing interest in rent-to-purchase option (RPO) agreements that allow you to put some of your rental fee toward purchasing a machine or attachment, or return it at the end of the rental period.

Equipment rental rate vs. purchase cost

1. Consider cost of ownership. Purchasing a machine carries a greater commitment that typically includes insurance, taxes, licenses, registration, maintenance, operating expenses and transportation fees. It may be difficult to justify the total cost of ownership compared to a flat monthly equipment rental rate for a machine that is delivered to your jobsite.

2. Be aware of tax implications. Always consult your financial advisor or tax professional to determine if a purchase is a smart decision. While you can deduct equipment rental payments as a business expense on tax returns, there could also be tax incentives for purchases, such as advanced depreciation.

The decision to buy or rent is entirely dependent upon your company’s situation. Take the time necessary to fully evaluate all of the factors. The final decision comes down to being able to complete the work you’re performing in the most efficient and affordable manner possible.

Now that you know the advantages of renting and buying, check out how you can boost your profits with these attachment rental options. Work with your local Bobcat compact equipment dealer to determine what purchasing and renting options are available to meet your equipment needs.

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