7 Tips for Successful Construction Equipment Leasing

Benefits can include lower upfront costs, improved cash flow, access to current technology and greater flexibility. By understanding the process and heeding some key tips, you can ease and facilitate the process, and avoid common mistakes.

1. Lease the right equipment for the job. It can be challenging to select the correct piece of equipment, whether because of capacity, function, size or other. Take the time upfront to complete a good needs analysis, and work with specialists at the leasing company who know the equipment inside out. The time will be worth it, as you’ll increase efficiency and decrease safety risks.
2. Carefully read and understand the lease agreement. Each agreement will be different. Even if you are leasing from a familiar company with which you work often, it pays to read the fine print. Make sure to look for, and understand, the payment schedule, any penalties for late payments, damage fees, insurance requirements and early termination clauses. Hidden costs can include origination, processing and commitment fees, and at times, deposits.
3. Research maintenance costs. The lease agreement should spell out your maintenance responsibilities during the time you are leasing the construction equipment. It’s up to you to plan and schedule the maintenance activities and their cost. As with any vehicle, routine maintenance helps avoid significant repair costs down the line, and ensures that the equipment will perform at its best. A thorough understanding of maintenance costs also will hep avoid any penalties or additional fees from the leasing company.
4. Conduct initial inspections. When you rent a car, you’re advised to check it thoroughly for any scratches, dents or malfunctions before leaving the lot. Likewise, it’s important to conduct an inspection on leased construction equipment before you put it into use. It will help you avoid any downtime due to pre-existing damage, repair costs you didn’t plan on or even accidents on the job.
5. Conduct all necessary operator training. Specific skills are often needed for specific equipment; an operator trained in one piece of equipment does not necessarily have the skills needed for another – even similar – piece. Proper training results in higher efficiency, smoother operations and a safer working environment. Many leasing companies offer training programs for the equipment they lease.
6. Evaluate leasing versus buying. Leasing is the right decision in many situations for many good reasons. But it can be worthwhile to consider buying equipment. For example, businesses that need to lease a particular piece of equipment for a designated number of years may be better off purchasing. If, however, the business needs to stay current with frequent technology advances on that equipment, leasing may be a better choice.
   
   Companies must weigh both options’ total cost of ownership with their cash-flow needs and other factors. Working with a trusted financing provider can help in this analysis and decision process.
7. Review financing options. Companies that lease construction equipment typically work with financing providers which set up programs for customers. If you are leasing from a manufacturer, ask about available options, and review them in detail.
   
   For many companies, leasing construction equipment is not their only financing need. They will find tangible benefit in developing a relationship with their own financing partner that specializes in the construction industry.

A financing partner differs from a financing provider. A partner will work to understand your business model and your goals, with focus on long-term growth. They will help with lease financing in the context of your particular business, and be able to suggest alternatives as appropriate. For example, some partners may offer usage-based, as-a-service and other finance-forward models for construction equipment. They will be able to customize solutions that help maintain business cycle flexibility while staying on track with sales growth.

Leasing construction equipment can be a smart move. Making sure to include construction equipment financing as a vital component in the process will help ensure a more successful experience.

Mitsubishi HC Capital America is a leading independent equipment finance company with a specialty in the construction industry. Working with businesses throughout North America – including manufacturers, distributors and dealers – the company designs and implements customized financial solutions that support business expansion and growth. Contact us to see how we can help with your construction equipment financing.