4 April Could Construction Equipment Leasing Be the Right Choice for Your Company? April 4, 2018By Tracy Spence Construction Equipment Leasing, Financial Leasing, Operating Leasing Construction Equipment Leasing 0 There are many financing options available when you need to acquire new construction equipment. Whilst some businesses will always want to own the asset, leasing is becoming the financing option of choice for those wanting greater flexibility. Leasing basics There are two main types of equipment leasing – operating leases and finance leases. An operating lease is where the customer rents an asset over a period shorter than its useful working life. For vehicles this is often known as contract hire, where the lessor retains the responsibility for maintenance. These are the simplest forms of leasing as there are no maintenance costs involved for the customer (known as the lessee). These tend to be shorter term contracts and are ideal if you need equipment for a specific project. A finance lease is where the customer or lessee rents the asset for most of its useful life. These are also known as capital leases. Here the customer takes on most of the risks and rewards of ownership including maintenance costs without actually owning the equipment. It feels a bit like hire purchase but works differently for accounting purposes. It usually consists of a primary rental period where the monthly payments amount to the full cost of the item plus the interest. Then there may be the option to continue to lease it at a lower amount, sell it and share the income or return it to the lessor. Benefits of construction equipment leasing There are many benefits to Construction Equipment Leasing but let’s look at the main ones: Improved cash flow Lease payments allow for the capital cost to be spread over the working life of the asset improving cash-flow. Operating leases are less expensive because the lessor retains a ‘residual value’ in the equipment, which they realise when the goods are returned. Leasing repayments can also take into account seasonality by matching payments to the differences in income. Keep using the latest equipment Construction equipment manufacturers are always looking to update their equipment. Without regularly updating your equipment it can become outdated putting at risk your ability to win new projects. Leasing, allows you to retain the latest equipment as you will return the equipment at the end of the lease. Having the latest equipment not only maintains your efficiency but also your reputation with clients and prospects alike. Refinance existing debt Some companies offer an option to refinance your business through a sale and leaseback agreement. Here the lessor will purchase your assets and lease them back to you freeing up much needed capital. Choosing the right leasing company Choosing the right leasing company is important to ensure you secure the best terms available to fund your equipment. At Asset Funder, we have over 20 years’ experience in equipment financing and our highly skilled team have expertise and understanding of the construction sector. We also have access to a respected panel of the very best banks and financial institutions to ensure we get you the best deal available. We will not only get you the best terms but can provide you with a seamless, hassle free process to secure the funds quickly so allowing you to get the construction equipment you need when you need it. The construction equipment we finance includes: Cranes Dump Trucks Excavators Loading Shovels Dozers Concrete Mixers & Pumps Scaffolding Equipment Get in touch with Asset Funder to find out more about our construction manufacturing equipment leasing and how it can benefit your business. Learn more about the other services we offer by visiting our website. Comments are closed.