You’ve just won a major contract, but you need an additional excavator to get the job done right. Now comes the big question: Is it better to rent, buy, or lease the equipment? The answer can have a significant impact on your project’s profitability and your company’s long-term financial health. In this guide, we’ll break down the pros and cons of each option to help you decide.
Renting, Buying, or Leasing: What’s the Difference?
Before weighing the pros and cons, it’s crucial to understand the fundamental differences between renting, buying, and leasing heavy equipment. These terms are often used interchangeably in conversation, but in business, they represent distinct financial and operational commitments. Choosing the right path will significantly impact your project’s budget, your company’s long-term financial strategy, and your flexibility on the job site. Let’s clarify exactly what each option entails.
- Renting: You pay to use the equipment for a short term (daily, weekly, or monthly). The rental company is responsible for maintenance.
- Buying: You purchase the equipment outright, either with cash or through financing. You own the asset.
- Leasing: A long-term agreement (typically 2-5 years) where you pay a fixed monthly fee to use the equipment. At the end of the lease, you may have the option to buy it, renew the lease, or return it.
Cost of Renting vs. Buying vs. Leasing Heavy Equipment
Deciding between renting, buying, or leasing equipment comes down to cost. Aligning each option with your budget gives you an overview of how your bottom line will be affected in the long and short term.
Aside from the upfront cost of purchasing or renting a machine, there are ongoing expenses to consider, such as:
- Fuel
- Maintenance
- Storage
- Labor
- Repairs
Some rentals may incur additional charges for excessive wear and tear.
The Case for Buying Heavy Equipment
Investing in heavy equipment is a major decision with its benefits and challenges.
Pros of Buying Heavy Equipment
Some benefits of buying heavy equipment for your project or business include:
- Long-term investment: Once you’ve paid off your equipment, your only ongoing expenses will be maintenance, repairs, and storage. If you use machinery frequently, this can result in substantial savings over time.
- Greater control: When you own your own equipment, it’s always available whenever a project demands it. You won’t have to worry about whether a specific piece of machinery is in stock or whether another company has rented it. If your business is in constant demand, your work continues uninterrupted.
- Customization: Owning your own equipment means having the freedom to modify and adapt it to your specific needs. You can customize your machine with attachments, upgrades, and modifications to suit a specific project.
- Tax benefits and asset building: According to the Canada Revenue Agency (CRA), businesses may be able to deduct capital costs through the Capital Costs Allowance. You might be able to claim depreciation on equipment used for generating income, which can ease the financial burden of the purchase and improve your cash flow. Over time, this could reduce your tax liabilities and increase the asset value on your balance sheet.
Things to Consider Before Buying Heavy Equipment
Here are a few things to consider before investing in a machine:
- Higher upfront costs: The cost of buying machinery can stretch to hundreds of thousands of dollars. Small businesses or individual owners may find it difficult to justify this expense when they could allocate the funds elsewhere. If you’re experiencing budget constraints but want your own fleet, consider buying used heavy equipment at a much lower cost.
- Maintenance costs: Ownership also comes with the responsibility of maintaining your equipment. Older machines may require more frequent repairs—increasing overall maintenance costs.
- Storage: If you have a large fleet, you must consider where to store it. Leaving it outside exposes it to weather conditions that will cause wear and tear to machine parts.
- Depreciation: Even if your machine is well-maintained, its resale value will decrease after years of use. Resale or trade-in options exist, but you’re unlikely to recover the full investment.
When does Renting Heavy Equipment Make Sense?
Renting is ideal for short-term projects or unexpected equipment needs.
Pros of Renting Heavy Equipment
Some advantages of renting heavy equipment include:
- Flexibility: You can rent specific machinery as needed for different projects. If your project demands a backhoe one week and a compact track loader the next, you can adapt easily without being tied down to a specific fleet.
- Cost-effective: Renting avoids the high upfront fees of buying equipment. You can manage your budget by paying rental costs for the duration of your project.
- Reduces maintenance costs: Rental providers take on all maintenance-related responsibilities. This means you don’t have to deal with equipment breakdowns and project delays.
- Environmentally friendly: Renting promotes equipment sharing and reduces the demand for energy-intensive requirements for manufacturing new equipment, which helps reduce carbon emissions.
- Access to the latest technology: Rental fleets are often updated, giving you access to modern and more efficient machines.
Things to Consider Before Renting Heavy Equipment
Consider these factors before choosing to rent:
- Limited availability: Equipment availability is not always guaranteed, especially if other contractors are using the same machinery. If demand is high, it can be challenging to secure the machinery you need, which can result in delayed projects.
- Expensive in the long term: Continual rentals can end up costing more than outright buying the equipment. If you’ll be working on long-term projects that require regular use of the same equipment, you might be better off owning the machine.
- No return on investment (ROI): Renting does not contribute to your company’s assets because you’re not building equity with your rentals.
The Smart Alternative: Leasing Heavy Equipment
Leasing provides flexibility and ownership benefits without the significant upfront costs of purchasing. Contracts also allow you to extend or own the equipment at the end of the lease if you choose.
Pros of Leasing Heavy Equipment
Note these advantages of leasing:
- Lower monthly payments: Leasing tends to have lower monthly payments than renting, which provides more predictable budgeting.
- Ownership options at lease end: Many contracts include a buyout option at the end of the lease term. You could lease machinery for three years and then buy it at a reduced cost because the monthly payments can apply as a down payment.
- Longer-term access to the latest technology: Having the option to upgrade after the lease term means you can stay competitive by always using newer, more efficient machines.
Things to Consider Before Leasing Heavy Equipment
Consider these factors before leasing:
- Long-term commitment: Leasing locks you into a contract that may last several years. If your business or project requirements change, you may be stuck with equipment you no longer require.
- No immediate ownership: Although you can opt to buy the equipment at the end of the lease, some contracts don’t allow you to build equity during the lease period.
- Maintenance: You are typically responsible for maintenance and repairs during the lease term.
| Feature | Renting | Leasing | Buying |
| Upfront Cost | Low | Low to None | High |
| Term Length | Short-Term | Long-Term | Permanent |
| Maintenance | Included | Your Responsibility | Your Responsibility |
| Equity | None | Potential (with buyout) | Yes |
| Best For | One-off jobs, trying new equipment | Consistent use, predictable budget | Frequent, long-term use |
Should You Rent, LEASE, or Buy Heavy Equipment?
Renting can be valuable if you prioritize flexibility and low risk. It has lower upfront costs and allows you to test out equipment before committing, which is ideal for contractors with fluctuating equipment needs.
If you have consistent, long-term equipment needs and can afford the upfront cost, buying may be the best choice. Owning equipment also means you can build long-term assets, customize your machine, and avoid availability concerns, putting you in control of your projects.
SHOP Heavy Equipment AT Inland Truck & Equipment
Ready to find the right equipment for your next project? At Inland Truck & Equipment, we offer a wide selection of heavy equipment, with multiple purchase and financing options for the construction, forestry, and industrial sectors. Explore our inventory to find the perfect solution for your needs.
