Why Construction Companies Turn to Equipment Leasing

Why Construction Companies Turn to Equipment Leasing

For companies in the construction industry, it is critical to have the right equipment. Although, you can’t purchase equipment if you don’t have the funds. Of course, if you don’t have the capital available to invest in equipment, you can always consider equipment leasing as an option.

There are two major types of leases that construction companies can pursue:

An operating lease allows the company to lease the equipment for a specified period. Lease payments can be listed as an expense, not a debt. By doing this, your balance sheet doesn’t incur liabilities from thkkke lease, and it may qualify you for a tax incentive.

A financing lease is another option. This allows you to increase your company’s holdings and claim the equipment as an asset.

However, you’ll want to do some research because often the APR on a finance lease is higher than the APR of an operating lease.

A construction project only lasts for a certain period- but will vary depending on the project. Therefore, take some time to consider how long you’ll need the equipment. If you need it for a short time, leasing will be the most cost-effective.

On the other hand, if your project will last 3 years or more, you may want to look at some other options. Such as a loan. Though you’ll pay less each month on a lease than a loan, it’s important to consider the ramifications of a long-term lease on your business.

Another advantage of equipment leasing is that companies can negotiate with the leasing company to purchase the equipment when the lease ends. Leasing the equipment allows you to use it and see if it works for the task you need it to. This way, you avoid the annoyance that comes with purchasing a new piece of equipment to find out the function isn’t what you need. You can negotiate a pre-determined payoff for the equipment and then when the lease ends you can purchase it or return it.

Be sure to check with the lessor about the equipment they specialize in. After all, there are many types of construction equipment from landscaping tools, roofing tools, heavy machinery, and even vehicles. A good lessor will have everything you need and will have the experience to provide you with the support you need to make your experience as smooth as possible.


If you have a construction business and are interested in equipment leasing, contact Gipson Commercial Solutions. We would love to help you out with learning more about leasing your equipment.