8 Reasons You Should Rent Equipment instead of Purchasing

It's nothing new to purchasing either brand-new or used construction equipment by contractors in Singapore and Malaysia. So, how to gauge if the purchase or rental of construction equipment is the best option?

There is a common rule of thumb for a decision to purchase equipment. 

“Your utilization rate should be at least 65% and above for the entire payback period”.

Of course, it depends on your purchasing cost to calculate your payback period whether it's economically sound and comparable to rental. Otherwise, the rental will always be the better option.

So, what are the advantages of rental?

1. Better cash flow - Purchasing new equipment requires a hefty upfront cash payment. By rental, there is no hefty upfront payment required. Moreover, there is some rental company offer credit terms to the client.  With that, you can maintain and improve your cash flow significantly.

2. High flexibility in equipment range selection - Purchasing equipment will fix you to only one type and range of specifications. With a rental, you are able to change any type and range of specifications to fulfill your different requirements. You will also have the chance to consistently trial new equipment technology and feature.

3. Zero headache of repair and maintenance - Maintaining a team of mechanics and storing an inventory of spare parts is never been an easy thing. By rental, you no longer have to worry about maintenance or repair at all as this is solely under the rental company's responsibility. Less headache and just use it.

4. Avoid equipment storage cost - Singapore's land and space are so limited and expensive. Storage of large heavy equipment is not an easy matter and it will definitely cause you a lot of money.

5. Shielding from construction cycle downturn - The construction industry is so dynamic and history has proven that a construction downturn may happen every 5 to 10 years. If you are an asset-intensive company, you will feel tremendous financial pressure during an economic downturn where your equipment cannot work at all. By going for a rental, you do not have a long-term commitment, and can help you to sail through the impact.

6. Less debt, better balance sheet - One of the most important considerations is if you carry less debt, it's more healthy on your balance sheet. Equipment is a depreciating asset unless you can achieve higher ROI, if not rental can give you a much healthier balance sheet. Despite the rental may increase your expenses and reduce your margin in a short term, it can another way to reduce your corporate risk in the long term.

7. Depreciation - Purchasing an asset will increase your asset and increase your liability in your book. You will need to incur depreciation costs for the entire life of the machine. As value continues to depreciate, it makes it more difficult to recover the cost of your initial investment. 

8. Satisfy additional project requirements - Rental is also a good option to execute any additional scope of the project where the existing equipment fleet couldn’t meet the schedule. 

Singapore and Malaysia's construction equipment rental market is at a mature stage and there are many rental companies around.  Now, you can rent your preferred equipment with just a few clicks in front of your PC or mobile phone with antbuildz.com.