Understanding the Benefits of Renting Versus Leasing or Purchasing
You have a job to do that requires a range of equipment — some of which you already have in your fleet, some of which you will need to acquire. Should you buy, lease or rent the additional equipment you need for your project?
Business owners, operations executives, procurement staff and large and small contractors continually face this decision, weighing multiple factors in the analysis. In general, leasing or buying is appropriate if you plan to use the equipment frequently, and therefore can justify the often-major financial commitment. Of course, that presumes you can afford to tie up capital in gear that — regardless of its utilization rate — is likely to sit idle for a significant amount of its useful life or lease term.
On the other hand, renting is appropriate when the equipment is not expected to be in near-continuous use, or is used: seasonally; only for one specific project or set of projects; in response to an emergency; or for a finite short-term project or situation.
Simply, if you expect to use the equipment roughly less than half the time you would own or lease it, renting may be the better option. But if you want to perform a rigorous cost-benefit analysis, the American Rental Association (ARA) recommends equipment rental when the annual cost of rental charges divided by acquisition cost is less than $0.45, with acquisition cost including additional items such as insurance, maintenance, repair, storage, transportation, interest and fees.
Beyond the ROI calculation, there are multiple other reasons to consider equipment rental as the preferred option for your business or projects. Here’s a quick guide to the benefits of equipment rental:
You get the right equipment for your job:
- Renting equipment ensures you get the right size and type of equipment, rather than forcing owned or leased equipment to take on jobs above or below their rated operating capabilities.
- You get access to expert assistance from knowledgeable and well-trained staff who know the equipment and understand the job you need to perform
- Properly specified equipment eliminates the hidden costs of inefficiencies
- You operate more safely as properly specified equipment adheres to “intended use” guidelines
- Using the right equipment eliminates the cost of damage due to inappropriate use
- You can achieve more accurate cost planning as the correct equipment for the job can be guaranteed
- You have consistent access to the newest equipment on the market, including gear that features better safety and environmental profiles (especially when your state or locale has regulations pertaining to air quality)
You avoid the time, inconvenience and cost of maintenance:
- Preventative maintenance is performed for you, saving you time and worry.
- You can avoid the need to thoroughly clean, inspect, and service gear and instead focus on the productivity of your gear
- You can focus your employee hiring on core business needs instead of incurring the costs of highly skilled maintenance technicians
- You reduce the need for spare parts inventory management, regulatory record keeping and investment in and operating costs of a repair shop
- You are more productive and efficient, as the rental partner ensures better equipment uptime and availability
You achieve greater financial flexibility:
- You can deploy your capital for more strategic business priorities
- Avoiding capital investment in equipment, which affects your balance sheet, increases your borrowing capacity
- You simplify project costing by eliminating the cost of capital from project estimates
- You can drive better operating margins and cash flow with improved ability to manage direct operating expenses
- You can reduce costs related to haul trucks and drivers by using the equipment rental partner’s substantially less costly delivery services
You reduce the time and cost of managing fleet inventory:
- With “Just in Time” availability, equipment rental eliminates the need for holding “Just in Case” fleet
- You have less exposure to losses due to theft or shrinkage
- You can reduce space dedicated to equipment fleet, whether that’s warehouse space or yards filled with idle equipment
- You don’t have to worry about safety inspection requirements, such as Department of Transportation (DOT) or American National Standards Institute (ANSI) inspections
Other advantages to renting include:
- You can easily and rapidly ramp up your capability as you win new business without major capital investment
- Because equipment-rental fleet is usually available near your job site, you can get the gear you need faster without having to move it yourself across a large territory or span of operation
- You eliminate the time and costs associated with equipment disposal, including potential book value losses
- You know what your costs will be over the span of your rental agreement
- You avoid the taxes and licenses related to equipment ownership
Finding the right partner
Once you decide to rent, it’s important to work with a partner who enables you to take full advantage of the time and cost savings and convenience of equipment rental. Herc Rentals’ fleet is one of the broadest in the industry, with a product line that includes everything from small hand-held tools to large earthmovers, available for daily, weekly, monthly and long-term rental. With nearly 280 locations across North America, Herc Rentals is likely to be near to your job or wherever you need the gear.
While having a wide variety of tools and equipment is important, making sure all the gear you rent operates correctly and safely is of primary importance. Each time a rental item is returned to Herc Rentals, our expert technicians thoroughly clean, inspect, and service the item, ensuring that it remains job ready for the next project. We also offer jobsite repair and maintenance to minimize downtime.
We are committed to operating with a “Think Safety” approach to all of our work. While regular service and maintenance helps keep our equipment operating reliably and safely, Herc Rentals team members ensure you get the right equipment for your job, safety training, and manufacturer’s safety and instruction manuals as part of outfitting you with rental gear. Many of our locations also carry a full line of personal and jobsite safety accessories.