How Does Construction Equipment Leasing Work?

It is estimated that about 70% of businesses in the United States lease some or all of the equipment that they use in their day-to-day activities. That such a high number of businesses in the country use leased equipment is no coincidence. Leasing construction equipment makes a lot of sense when it comes to keeping your capital costs down and ensuring that your operational costs are also under control. Leasing construction equipment also ensures that you avoid spending your capital up front as well as ensuring that you get the right equipment for your needs.

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Which Companies Benefit from Leasing Equipment?

Generally speaking, almost all companies in all sectors can lease various kinds of equipment. People tend to assume that only companies that deal with large expensive equipment can benefit from equipment leasing but this is not true. When it comes to the construction industry in particular, leasing equipment works well here because jobs tend to be on a project basis. This means that the construction company can lease equipment from project to project, thus ensuring that they are not holding on to expensive equipment in between assignments.

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How Leasing Works

Construction companies looking to lease equipment have the option of seeking financing to help them access the equipment they desire. This is exceedingly helpful in cases where the company that seeks to lease equipment does not have the cash to buy or lease the equipment they need. Equipment leasing financing can be structured in such a way that it makes it easy for the company to pay the debt over a specified period of time. Once financing is secured, the business then seeks out equipment suppliers in order to get the right equipment for the project at hand.

Typically, the lessor and lessee enter into a legally binding agreement that defines what equipment is being leased, the period of time that the agreement holds, and so on.

Benefits of Leasing Equipment

There are numerous reasons why construction companies opt to lease equipment instead of buying it. Business owners looking to avoid making a major capital investment in equipment while at the same time carrying on with their work are likely to go for equipment leasing solutions. It is also possible that a business owner is unable to purchase the equipment outright and leasing becomes the only way to acquire the equipment. Leasing construction equipment is also a great way to acquire the latest technology without having to pay a premium for it.

Factors to Consider

When you are considering going the equipment leasing route it is important to be clear how long you need the equipment. Although this varies from agreement to agreement, there could be major financial repercussions if the equipment is returned earlier or after the agreed date. If you are going to seek financing for the equipment leasing, study the terms and conditions of the financing agreement carefully as well. Ensure that the period repayments that you are supposed to make are also within your ability to pay.