Equipment rented on a day-to-day basis includes full maintenance. You need no repair shop, no mechanics, no spare parts inventory or maintenance records.
Costs related to breakdowns of owned equipment are not applicable to rented equipment. When rented equipment breaks down, it is replaced by the equipment rental business at no cost to you. Time loss on breakdown of owned equipment as well as the cost for repairs must be considered.
Warehousing facilities are seldom needed for rental equipment. Renting makes it possible for contractors to operate with less overhead.
Equipment rental offers the contractor or customer mobility that does not exist with owned equipment. A contractor can bid on a job several hundred miles away based on renting equipment needed near the jobsite. Availability and convenience have become one of the strongest arguments against ownership.
Better cost control is possible with rented equipment. Knowing the true cost of owned equipment is difficult. Rented equipment offers one accountable cost figure – that shown on the rental invoice.
Another advantage in renting is better inventory control. Contractors have less inventory loss due to theft when equipment is rented. The presence of a continuous billing on any rented item tends to establish accountability for that item. Equipment signed for at an equipment rental business which must ultimately be returned is watched with sharper eyes.
It costs money to sell used or obsolete equipment. Preparing for resale, advertising and selling time are cost factors of ownership.
Day-to-day renting eliminates obsolescence. Ownership risks being handicapped with slow, unwieldy equipment. An equipment rental business provides the latest types and models of equipment.
Correct Equipment for the Job
Ownership forces another kind of inefficiency through use of the wrong size or type of equipment for a given job, even though the equipment is not obsolete. This can mean additional, though hidden, costs. Rental insures the correct equipment for the job.
Minimum Equipment for the Job
Equipment ownership becomes particulary expensive when the equipment is idle. When ownership of basic equipment is combined with rental; as needed, idle time is minimized.
Personal Property Taxes and Licenses
There are no personal property taxes or license costs for rented equipment. Ownership incurs these substantial costs.
Conservation of Capital
Rental conserves and frees capital for other, potentially more profitable uses.
Increases Borrowing Capacity
The equipment user who rents rather than buys finds borrowing easier because they have a better ratio of assets to liabilities. Since the equipment does not appear as a liability on a balance sheet, the normal bank credit is not disturbed. This can be important in securing construction bonds.