Renting Vs. Purchasing Used Equipment – Which Is Better?

Before the pandemic, there was always a steady demand for renting used construction equipment  . Renting any asset instead of outright purchase was beneficial to users with specific business goals and financial planning. Many construction companies and individual contractors require construction equipment of various brands, models, and capacities depending on the nature of the project.

 It is common knowledge that construction equipment is an expensive asset and requires massive initial capital outflow for purchasing them outright. Buying outright in cash of capital-intensive equipment is not possible for all equipment users. Even financing from Banks and Finance companies may require paying a minimum of 20% of the asset cost and getting the balance 80% financed for a fixed loan period. It means an obligation of paying monthly installments to the financier irrespective of whether one uses the asset or not. Plus, there is an interest component on loan, which makes the overall cost of the investment more expensive in the long run.  

Rental equipment is better 

Construction companies who work on a turn-key basis on any project usually take construction equipment’s on rental for the short or long-term depending on the project’s duration. Once the work gets completed, they return the equipment to the rental company. This arrangement is excellent and hassle-free. 

The economic crisis triggered by Covid-19 impacted the growth of the construction industry. It resulted in a shift in the market as construction projects resorted to renting construction machinery rather than outright purchasing. The delays in construction projects and the drop in industrial manufacturing outputs resulted in lower cash flows and operating incomes. Buying a new wheel loader, for example, meant high initial capital outflow and higher depreciation loss. On the other hand, taking used wheel loaders in Dubai on a rental basis came with many advantages. 

The advantages of renting vs purchasing used heavy equipment

Purchasing a new or used construction equipment outright means that apart from ownership, other expenses like insurance, maintenance, licensing, and depreciation go in the owner’s books. The breakeven period for such machinery is therefore higher. On the other hand, renting the equipment meant lower operating costs and higher profits. The hassles of additional expenses and maintenance are the rental company’s responsibility. Moreover, one can take the crane on rent or lease for a shorter period depending on the nature of work. Several heavy equipment companies in UAE function on a hybrid business model to provide the best services to their clients. They offer equipment on a sale and rent basis. 

Operators working on different projects may require different types of equipment, including wheel loaders for various tenures. It is not feasible to keep purchasing all kinds of equipment with so much uncertainty around. The best option is to approach a Used Construction equipment rental company such as Anwar Al Quds, which has equipment of all types, models, and capacities in their stock. These 

equipment dealers can instantly provide one that is suitable for a particular project. 

Rental pricing 

The budget for hiring equipment is critical as the cash flow, and profitability of any project or operation is dependent on that. It is always prudent to check with different rental companies and compare their pricing. It will give a clearer picture of what’s included in the rental services and what is not covered. It is also advisable to ask questions and clear doubts beforehand to avoid disputes later on. Being transparent with the rental partner helps in the long run as some specific equipment such as excavators, cranes, wheel loaders, etc., is required regularly by those businesses in the industrial or construction industry. 

If you are a rental customer, machinery providers like AAQ machinery in the UAE can assist you. They have a comprehensive inventory of 500+ products in their stock and serve in 100+ geographical locations.