5 Lessons Learned: Equipment

Options Available for Getting Heavy-Duty Equipment

Construction equipment and engineering vehicles are the same things. They are heavy duty vehicles and machinery that are built for construction and engineering tasks.

Those who need to purchase such equipment need to approach an equipment leasing association for their financial planning. There has been an increase in activity in the construction industry in recent times, which has boosted the construction market.

Only major companies or smaller businesses with well-performing contracts can afford to buy their equipment outright.

Other entities have to rely on renting or leasing this equipment, depending on the contracts available at the time. This is what is manageable in financial terms. Renting is usually a short-term solution to the current needs, while leasing is normally used as a long-term solution to those needs.

A survey was conducted which revealed a large percentage of contractors who saw no need to own this equipment outright. They prefer to conduct reviews of the two alternative methods whenever they need to use the said equipment, and coming up with the best option of the two.

Leasing or renting has the express advantage over ownership of such equipment, where it makes it possible to test out the equipment without the weight of the heavy costs or long-term investments involved. It is common for suppliers to follow the rule that dictates any contractor who leases the equipment for more than six months has to buy it, to avoid losses in equity investment.

In cases where there are three contractors vying for the same tender, the one who happens to own the equipment in his possession needs to only think of the interest amount spent in buying the equipment when he costs the job.

If one of the other contractors has chosen to lease the equipment he has in place for the job, he has to factor in the recurring monthly expenses in servicing the lease payments, in his bid for the job. And in case the last contractor had chosen to rent out the equipment he has for this job, he only needs to think of that rent amount when he is doing his bid calculations, and does not have to worry about the equipment of any future expenses, even if the bid does not go through, since lack of usage does not incur any extra expenses.

Additional complications arise where there are a wide range of finance plans, which have more options that attract the contractors, of which the repayment terms can last between three to five years.

The major equipment manufacturers have their own financing departments, through which contractors can leas their equipment directly. They cater to a large chunk of the market.

Banks also have similar leasing arrangements. Other banks avoid such arrangements, due to their risky nature.

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