Whether to Buy New, Used, or Rent Heavy Equipment
When it comes to buying new, used or renting equipment, you’ll want to consider aspects such as usage, availability, types of projects and budget. You may have signed a few big contracts you need to prepare for, want to expand your fleet to maximize your capabilities or even replace outdated or broken machinery.
Whatever the reasoning, there are pros and cons to all sides depending on your specific requirements. Once our experts at Thompson Tractor help you evaluate the situation, abilities and finances of your business, you can select which will be most advantageous to boosting your company’s bottom line. From excavators, articulated trucks and wheel loaders to skid steers and crawler dozers, we have you covered with a personalized solution.
What to Consider Before Making a Decision
Renting vs. buying heavy equipment is circumstantial to different business owners, fleet managers and construction project supervisors. It’s not a process that you should jump into, but one where you should take time to think about several factors such as:
1. Your Financial Situation
The first major question relates to heavy equipment financing and whether you have enough capital to buy. If not, renting is a more suitable option. You can also project the cost of a one-time high upfront cost vs. renting over a long period of months or years. From a financial standpoint, owning heavy equipment means you could see a high return on investment if you decide to sell later on.
2. The Cost of Buying vs. Renting
The price of ownership includes maintenance, operating costs, insurance, transportation, licensing fees and more while renting is an inclusive cost. While both owning and leasing include fuel investments, it’s vital to consider the upfront vs. continual payment process.
3. Job Frequency and Duration of a Project
A construction project length can be the deciding factor in whether to buy or rent heavy equipment. If you’re looking for short-term, specialized machines, renting is your best bet. However, a downfall is running the risk of not taking full advantage of the equipment if the project or schedule changes and the machine is unused.
Long-term projects, jobs requiring various pieces of equipment or having several gigs lined up are great reasons to buy new or used machinery. While rental costs increase as time goes on, investing in multi-purpose machines that can be used for dozens of tasks is a definite asset to have on site.
4. Availability and Use of Machines
Another consideration is how much you will need the machines. Owning allows you to have heavy equipment at your fingertips 24/7 to jump on new projects. It can help your business stay ahead of the game when changes in your schedule or projects occur. You will experience less downtime as well.
But if you plan your projects well, renting can be a great tool to tackle several smaller tasks at once. It may not make sense for you to have access to particular machines every second when you only need them for several weeks or months at a time.
5. Management and Inventory Control
Heavy equipment cost management comes down to handling logistics, storage, insurance, maintenance, service, transportation and other factors when buying. Buying gives you flexibility and freedom, but it also comes with more responsibility on your end. You can save money over time by purchasing equipment, but if you have more short-term tasks, renting is a more reasonable investment. And if you use it for fewer months than expected, selling is always an option. Calculate your heavy equipment fleet management capabilities and expectations before making a decision.
6. Your Heavy Equipment Needs
When it comes to your current fleet, you should be asking questions including:
- Does renting cost more than owning in the long-run?
- Will leasing delay projects?
- Do you need immediate solutions?
- Is the value of renting low compared to the total cost of a project?
- Do you need to replace any current machines?
Understanding what your existing operation looks like and how you want it to look in the future can help you decide between buying and renting.
7. Transportation Costs
Renting vs. buying also involves transportation costs that can affect your business. Consider the effort of driving, loading and unloading for each job. Does renting or buying make more sense? Do you operate within local vicinities or commit to interstate jobs? Do you have the finances and trailers to cover transportation costs?
When you go through the process of asking critical questions, you will know how an investment or leasing agreement will affect your company. Once you have a clear idea of how to approach your needs, you can make a decision based on your particular situation. Choose from new, used or rented heavy machinery such as:
- Articulated trucks
- Class 8 trucks
- Compact excavators
- Compact truck loaders
- Crawler dozers
- Low ground pressure (LGP) dozers
- Motor graders
- Rigid-frame trucks
- Single-drum compactors
- Skid steers
- Wheel loaders
Thompson Tractor experts can help you decide when to invest in new machines, buy used heavy equipment or choose rental solutions. We support you in selecting the option that best fits your company as well as which machine or fleet of equipment will suit your exact range of projects.
When to Buy New Heavy Equipment and Which Pieces of Equipment to Buy New
Knowing when to buy new heavy equipment comes down to a few simple circumstances. As part of our heavy equipment buying guide, consider investing in new machinery when you want the following:
- Full control over the use and maintenance of a machine
- The best quality equipment available with the latest technologies
- A machine ready to go without waiting
If you’re a business owner, fleet manager or construction project manager with an extensive line of projects, buying new equipment gives you control over how you use it, how often and how you maintain the machine. When you need to service your fleet, rely on Thompson’s support agreements to keep your equipment running at its most efficient and highest levels. Opting for modern devices gives you access to efficiencies and fleet management software as well.
The total price to own heavy equipment may be a significant upfront cost, but over time, you’ll pay less than if you rented. Financing programs help to make it more affordable as opposed to a massive one-time cost. The heavy equipment return on investment is also high, especially if you decide to sell it in the future.
Pros of purchasing new equipment include:
- More economical in long-term perspectives
- Higher ROI
- The flexibility of having the equipment when needed
- Less downtime
- Tax advantages
Paying for what you want without having to worry about leasing regulations and paperwork is a great advantage for your company. You can also determine maintenance regulations as opposed to abiding by leasing regulations. If you operate the equipment all the time, have the resources to maintain the machinery and have storage space, buying is your solution.
Along with heavy equipment tax deductions, buying creates less downtime of your operations. When you need an excavator at one site and a dozer at another, you don’t have to wait for a leasing agreement. Grab your equipment, transport it, and your workers are on their way. Our machines can work through a variety of jobs where you can add attachments and accessories, making them multi-purpose assets.
When to Buy Used Heavy Equipment and Which Pieces of Equipment to Buy Used
Often the term “used” denotes a negative connotation — but it’s far from the truth when discussing Thompson certified used heavy equipment. We recommend buying used machinery in situations such as:
- Needing an additional piece of equipment that’s outside of your budget
- Having the machine available when you need it
- Working standardized jobs where a single piece of equipment may be useful for multiple responsibilities
- Receiving certified used equipment
You can trust your Thompson Tractor dealer to deliver you well-maintained used pieces of machinery that can even be more economical than new equipment. The best used heavy equipment to buy is cost-effective in the long run if you plan on using the machines on a daily or weekly basis. We maintain good quality used heavy equipment that’s up to par with safety regulations as well as the latest tech to give you an advantage.
Used pieces of machinery are an incredible alternative to new if you don’t have the necessary finances. They are nothing short of top-level machines. Here’s how to calculate the cost of owning new or used heavy equipment:
- Upfront cost + ownership costs – resale value = total ownership cost
- Total ownership cost/ownership period = cost per period (day, week or month)
- Total ownership cost/hours used = cost per hour
If you use a machine more than 60 or 70 percent of the time, you should buy new or Cat® certified used heavy equipment. In other words, if you use it for about 175 hours over eight months of the year, buying will be more cost-effective.
When to Rent Heavy Equipment and Which Pieces of Equipment to Rent
Like each option listed above, there are pros and cons of renting heavy equipment. If you are looking to rent heavy equipment in Alabama, we suggest it’s a wise move when your company is in the following situations:
- Not using the equipment more than 65 percent of the time
- Working on different job sites and projects
- Wanting to remain financially flexible
- Trying to avoid maintenance and other ownership costs
- Wanting to test-drive new technologies
Leasing heavy equipment is in your favor by granting you access to the newest machines on the lot. With the latest technology at your convenience, you can feel assured you’re working at some of the highest levels. The cost of renting is beneficial if you consider the usage ratio for one-time projects. Renting machines can be ideal based on your specific needs at different times throughout each season and project.
Advantages of heavy equipment rentals in Alabama include:
- A lower upfront cost that often doesn’t require a down payment
- Access to more machines when needed
- Ability to work with the newest, fastest and safest equipment
- Insurance, maintenance and transportation handled by a third party
- Predictable monthly expenses that help your company budget for future purchases and expenses
- Enables you to keep up or surpass competitors by having the latest tech without overspending
- Capability to test drive new equipment to see if you want to make a future investment
Many machines include telematics that can read productivity and show you how to reduce costs while illustrating operator behavior and training opportunities. You can use the tech on each rented machine rather than sticking to what you have that may be outdated.
The cost and convenience of renting are also beneficial. If you can’t maintain your equipment or don’t have facilities to store them, we can take care of it for you. You also can choose the exact size of machine for your various projects — which can save you money because you won’t waste gas or exert more power than necessary. With leasing opportunities, you don’t need to know how to fix the machine, only how to operate it.
Calculating the cost of renting includes:
- Rental rate per hour, day, week or month x rental period + pickup and delivery fees = total rent cost
- Total rent/rental period = rent cost per period (day, week or month)
- Total cost/expected hours of use = rental cost per hour
Rely on Thompson Tractor
Thompson Tractor is a full-service sales, parts, service, rental, tech, fluid analysis and power solutions operation — everything you need as a construction contractor. We offer advanced technology and comprehensive parts and maintenance to help boost your operations forward. As an industry leader, we are also local to Alabama and Northern Florida.
Our team gets to know your needs and are here to support them. With 60 plus years in the business, we partner with you to build a relationship that lasts through each new stage of your growing business. Thompson Tractor professionals are reliable, trustworthy, experienced and knowledgeable to take care of your buying or renting requirements. We are your go-to heavy equipment dealer in Alabama. You can reach out to us online. If you know the solution that best fits your position, you can skip ahead to shop heavy equipment on the Thompson Tractor site whether you are buying new, used or renting machinery.