When assessing the work ahead and the equipment needed for their projects, contractors and developers first must evaluate what makes the most sense for their machinery needs. Is it best to rent, lease or buy? The ultimate choice will depend on a number of different factors, but Josh Peddycord, Fleet and Remarketing Manager for SANY America, has some tips and suggestions to help make sense of when each option might be right for you.
If you have a short-term project or need a specific piece of machinery for a one-off need, renting is often the right choice. Typically, rentals are most convenient if the project is only for a few weeks or if a contractor needs a specific machine to accommodate a specialized attachment or unique working condition.
Sometimes, however, in the course of renting, contractors find that they have even more uses for an excavator or wheel loader than originally expected – that’s when the RPO – rental purchase option – can be handy. This is a great choice for contractors looking to have the option of a buyout, striking a balance between leasing and regular rental contracts.
“[RPOs] are typically six months or longer, and defined by a specific time frame,” said Peddycord. “A contractor can apply a portion of the monthly payment toward the agreed upon purchase price and then purchase the machine at the end of the rental period.”
A rental or RPO contract can also provide peace of mind for a contractor. In some cases, the rental fleet owner will handle maintenance and upkeep needs for the machine being rented, eliminating the need for a contractor to worry about routine service. Rentals may also be backed by a downtime guarantee, meaning that if there’s any major breakdown or mechanical issue, the rental supplier will provide a replacement machine, eliminating concerns about equipment being out of service.
For contractors who need equipment for a longer term, whether for a series of projects or a single long-term job, leasing may be the right choice. Leases generally average 24 to 36 months – though longer terms are often available – and also help keep the overall cost of ownership low with steady, known budgeting numbers. Choosing a lease often includes an option to buy out at the end like an RPO, but offers a few advantages for contractors.
“[A lease] is a great option for keeping capital expenditures off your balance sheet,” said Peddycord, noting that this is an option some contractors prefer as it allows them more versatility in investing their money into aspects of the business, such as employee costs, materials or other expenses. “But done right, with understanding of your machine’s depreciation and value at the end of the lease, it’s still a fantastic option for many.”
When evaluating for leasing, a contractor needs to first understand their needs and their timetable. Most leases have a limit to the number of engine operating hours for the lease period – not dissimilar from mileage limits on a standard vehicle lease. And, in the same way, there is typically an overage cost for each hour in excess of the limit. Peddycord added that in most leasing agreements, there is generally a wear and tear limit, such as stipulations that the tires or treads must be at 50 percent of usable life or better at the end of the lease. If your lease puts more wear on these components, you’ll need to replace or repair these parts before returning the equipment at the end of the lease. That can be an out of pocket expense, similar to what you might have on an owned machine, but on equipment that you will end up returning.
Finally, if you are replacing an old machine or looking to add something new to handle increasing work demands on a long-term basis, there’s a good chance that buying is the best bet. Choosing to purchase a new machine means that your payments go toward ownership in a new piece of equipment that you can own and sell in the future.
“With the different tax options in place today and the value put on [machines], there are several reasons to purchase,” said Peddycord. “Understanding the total cost of ownership (TCO) when purchasing is pivotal for the buyer, and the more you know before buying, the better decision you can make.”
There are many factors that go into understanding the TCO, such as the value of the new machine compared to market rate or the estimated resale value of a machine after a few years of use. There is also the expected cost for maintenance and repairs – one of the areas that SANY machines offer a distinct advantage with the industry’s best five-year, 5,000-hour warranty on new equipment. Finally, through the SANY dealer network, buyers will also find a partner who can help with everything from routine service needs to parts ordering and warranty repair work.
SANY Capital is also helping business owners and contractors with ownership during the changed business landscape of 2020. Through its financing partners, SANY Capital is offering many flexible ownership options, including zero interest financing for up to 48 months or low-interest financing for five or six years. Deferred payment and flexible payment programs are also available on many machines. Contact your local dealer to learn more and find out what programs may be able to help you purchase the SANY equipment you need for your operations.
SANY is also working to further transform the parts business with an independent third-party vendor which will help provide parts to dealers and customers on a routine schedule – before owners even know they’ll need it. This helps owners minimize downtime by ensuring availability of vital components and parts, helping to keep equipment working instead of being worked on. SANY and the dealer network are dedicated to keeping customers happy, profitable and tackling their toughest jobs with reliable equipment, backed by high-quality support staff and readily available parts, when needed.
Whether you rent, lease or buy, you can count on SANY equipment to be ready to get to work when you are. Delivering equipment Made for America, SANY and its dealer network is committed to you and your needs, with machines that are built tough using components from well-known brands and tested to work in some of the most difficult working conditions. Find a dealer near you and learn why so many contractors and fleet operators have turned to the balance of affordability and performance found in SANY equipment today.