Guide to Long-Term Equipment Rental
Heavy equipment rentals are a convenient and cost-effective solution for contractors, equipment fleet managers and construction company owners to get the right equipment at the right time, no matter what job comes up. Having the flexibility to procure heavy equipment for one-off jobs is an excellent way to supplement your existing fleet if you already own staple equipment.
You might already prefer the construction equipment rental option when sourcing big-ticket machines like excavators, aerial lifts and material handlers — and one-time equipment rentals are a great short-term option. But, you can also arrange long-term rental agreements to ensure you always have access to valuable, high-quality equipment. Here's your one-stop guide to renting construction equipment long-term.
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Why Rent Construction Equipment?
Renting construction equipment makes a lot of sense to many business owners involved in earthmoving, road building and general construction of industrial, commercial or residential projects. There are many reasons it’s beneficial to rent or lease machinery, but it always comes down to the business' bottom line.
Ultimately, the decision to rent or lease equipment is a matter of convenience and cost. It also depends on your short-term goals and long-term strategy. Deciding to rent construction machinery requires making a cost-benefit analysis and a thorough business plan involving current and future contracts. Here are the top reasons long-term equipment rental can benefit a company’s overall performance and financial security.
Capital Management
Renting equipment for long-term projects doesn’t command a cash deposit or a permanent commitment. Equipment rentals allow you to predictably manage cash flow, which is one of the most prevalent reasons company owners choose to rent. Equipment rental is a business expense that’s off the balance sheet.
Though the complicated tax laws allow prorated deductions for equipment purchases and consider machinery as an asset, long-term equipment rental can also have positive tax implications — a decision to discuss with an accountant.
Depreciation and Value
Renting construction equipment places the depreciation factor on the dealer or supplier. All machinery has a guaranteed depreciation rate no matter how low the usage hours or how well you have maintained it. Placing the depreciation on the equipment dealer rather than the renter can have real value for a construction company.
Servicing and Maintenance
All long-term equipment rental contracts place servicing and maintenance responsibilities on the dealer as well. Rental equipment suppliers absorb all costs of routine maintenance and are responsible for unexpected repairs. Relieving a company of service work frees up time and capital, which can deliver true convenience and value when paired with long-term rental agreements.
Availability and Versatility
Having a long-term rental contract for construction equipment allows a company to be versatile. With readily available machinery, companies can expand their capabilities and profit from additional jobs. Flexibility includes having the freedom to exchange equipment to meet specific contract parameters.
Competitive Edge
Construction is a project-based, competitive industry. To achieve maximum profitability and ensure future work, an efficient construction firm needs as many competitive advantages as possible. Long-term equipment rental agreements are another effective tool designed to help you expand your company's capabilities and become a leader in the marketplace.
Long-Term Storage
In addition to transportation expenses, you will always have to think about long-term storage needs for your equipment when you own it. Renting your construction equipment allows you to cut out the cost of finding a storage facility capable of accommodating all your equipment when it is not in use. The more equipment and tools you own, the more space you will need to organize and store it.
You will also have to consider weather damage, as you cannot leave your construction equipment outside for months on end without exposing it to wear and tear from extreme weather conditions. The storage facility or warehouse you would need to shelter all your necessary equipment would have to be a reasonably large size, which could be expensive to maintain. With this storage, you will also have to consider insurance and security costs for your assets.
Renting equipment can keep these costs low by reducing the need for storage space. When you have completed a project, or expect a long delay due to weather or other obstacles, you can return it.
Try out New Models
Investing in construction equipment can be a significant commitment. If you primarily rent your equipment but own a few essential machines you're looking to upgrade, renting is the perfect opportunity to try out different models. Investing your time and money in the wrong equipment can have a detrimental financial impact. Instead, you can test-drive some new equipment for your upcoming jobs and compare different options you're thinking of buying. Renting equipment gives you the time to make these critical decisions about your projects.
This method can help you determine which construction equipment to rent — or maybe add to your wish list to buy down the line. If you have equipment that has outlived its usefulness, renting also allows you to keep working without losing productivity. Renting equipment ensures your operations run efficiently until you've decided whether you want to buy a new machine or continue renting as needed.
Less-Than-Perfect Equipment
Construction equipment can be expensive, especially if you are looking to expand your business reach and offer more capabilities for construction or other services. With renting, you can take on more complex projects without worrying about the financial and maintenance responsibility of owning brand-new equipment. If your current equipment is not up to par, you don't have to halt your business procedures and bring in pricey tools.
Additionally, you won't have to rely on your existing equipment to do a mediocre job if you aren't in a position to purchase an entire new fleet of machines. Instead, renting enables you to take full control over your business' future.
Explore New Projects and Opportunities
If you have a limited supply of equipment, it may hold you back from taking on bigger projects that help you meet your business goals. Some larger or more detailed projects require specialized equipment which may not be at your disposal. Rental equipment enables you to expand your capabilities while keeping your business profitable.
Spending your budget on the equipment itself won't leave you much room in capital for other projects you may have wanted to pursue. Instead of buying, renting opens up new opportunities beyond regular construction. Renting equipment will also provide flexibility and remove the limitations of owning equipment meant for a small range of projects. With long-term rentals, you have access to the specific, specialized equipment you need for each job.
Cover Urgent Projects
If you are working on a high-priority project or need to shuffle your schedule, renting allows you to quickly adapt to a more efficient solution. You can easily rent additional equipment to help with the workload to finish on time or try out bigger machines to see if they can get the job done faster. Rental equipment is often easier to obtain than purchasing brand-new equipment. You can reduce your waiting and turnaround time and focus your energy on your project.
Additionally, you won't have to halt production and labor while you wait for your equipment to arrive. Rental equipment is usually ready on demand, saving you time and money while helping you reach your project goals.
Project Costs and Budget
Your budget is a critical factor in your business' success and boosting productivity. Staying within your budget is easier when you rent equipment because you can create a more accurate estimate for your construction expenses. With equipment rentals, you may see a more profitable project with a clear, upfront rental fee and fuel costs. While there may be insurance and deposit expenses, you can easily adjust these into your project's total rental cost, reducing any surprise expenses.
With rental equipment, you may also see a reduction in insurance premiums for policies that cover your machines from damage or theft. Minimizing costs where you can will help keep overhead costs low, which may also enable you to re-allocate your funds for other significant project investments.
Short-Term vs. Long-Term Equipment Rentals
There’s no exact definition of what constitutes a long-term equipment rental contract. Generally, long-term rental agreements differ from one-off or short-term contracts by the length of time they’re in place. You can discuss and clarify your long-term rental needs with a construction equipment rental dealer like those in The Cat® Rental Store network.
The Cat Rental Store network offers the world’s largest construction equipment rental fleet. Our premier international outlet supplies diverse machinery for projects ranging from dam building to high-rise commercial construction. At The Cat Rental Store, we help business owners determine the necessary equipment they require, assist in finding an appropriate timeline and offer solid advice to help construction businesses complete a comprehensive business plan.
Part of a thorough business plan is setting equipment rental contracts in place. Rental contracts don't have a fixed long-term period, as there's no one-size-fits-all approach to rental agreement timeframes. How long a company might require rental equipment is unique to an individual business, but it’s a vital part of planning The Cat Rental Store contributes to. Here’s a general overview of one-off, short-term and long-term equipment rental periods.
- One-off rental contract: One-offs are quick in-and-out rental deals where a company only requires a particular equipment piece for a single job. You might rent by the hour or a day-to-day basis. One-off rentals are simple arrangements where the dealer drops off and picks up a necessary machine for a fast and easy task.
- Short-term rental contract: Short-term rentals have a bit longer timeframe than one-offs. After a few days or weeks with a machine, the renter returns it to the dealer. Short-term rentals allow a company to experiment with different equipment before entering into a longer arrangement.
- Long-term rental contract: Long-term agreements are lengthy and sometimes semi-permanent contracts. These arrangements cover periods from a month to over a year. Long-term rental contracts give the construction company assurance that the equipment they need will always be available and that the supplier will keep it in good condition. Renting long-term also assures the dealer that their machinery will be in reliable service and not sitting idle.
Long-term equipment rentals make a sound business case for many construction companies. These agreements conserve cash, assure reliable performance and benefit from having equipment available for work as needed. However, deciding to rent long-term requires a comprehensive business plan to determine financial feasibility and weigh options.
Complete a Thorough Business Plan
Operating a construction company without a thorough business plan is like trying to build a project without blueprints. Without planning a serious matter like long-term equipment rental, a business could enter into a rental agreement that doesn't meet their needs and can end up delaying projects.
Many business plans start with creating a matrix. This simple planning tool lets company owners or managers visually absorb factors that influence their decisions. Developing a long-term rental matrix as part of a comprehensive business plan involves careful consideration and detailed analysis. Here are some factors to consider in completing a thorough and strategic business plan involving long-term rentals.
- Project length: If renting construction equipment for a specific project, the required length or duration is a critical factor. Long-term renting secures the equipment for as long as you need it, ensuring you don't get caught short at a critical moment. Project length should be at the top of the business plan matrix list.
- Equipment use: Using equipment is another crucial factor in completing a thorough business plan. Use goes beyond duration and takes in factors like assorted job tasks, not only specific roles. Cross-using machinery makes practical and financial sense and should be on the matrix list.
- Trends: Construction equipment technology changes rapidly. Machinery that’s current today might soon be obsolete. Long-term renting gives a business the freedom to return outdated equipment at the term’s end. This point is a pertinent part of the planning process.
- Familiarity: Long-term renting allows company owners and operators a decent period to get familiar with the equipment. Familiarity equals efficiency, which has a positive return on profit. Since you started your business to turn a profit, this item belongs near the top of the business plan list.
- Financial impact: Drilling deeper into the profitability portion of a company’s business plan, every decision made should include how it impacts finances. One of the chief reasons many construction companies choose a long-term rental over buying equipment is how it affects cash flow. As they say, cash is king, and retaining it is a paramount financial impact to consider in business planning.
Determine the Necessary Equipment
No business plan is thorough without including the equipment necessary to execute it. Successful execution stems from careful planning, and that’s what the matrix helps achieve. Weighing options to rent long-term or make a purchase commitment is part of the plan, and it involves assessing your equipment requirements.
Contractors need a thorough appreciation of their equipment needs. They must know what machines they’ll get the most value and use from. Here again, it’s beneficial to make a list of factors determining the necessary equipment for their contracts. You might find these suggestions useful in choosing rental equipment for your next job.
- Application: Intended use is a critical consideration in determining which equipment is necessary. Most construction machinery is for fulfilling specific roles such as excavating, paving or lifting workers to heights. Having the correct equipment for the role delivers superior performance compared to getting by with a substitute that isn't suitable for the work or site.
- Multi-use: Some construction equipment is more flexible than others. Today, many contractors find skid steers and compact track loaders are highly versatile multi-use tools. That includes applying the myriad of work tool attachments available from long-term rental dealers like those in The Cat Rental Store network.
- Duration: Contract lengths significantly affect the necessary equipment for the job. If it’s a short duration, a one-off rental agreement is excellent to source a highly specialized machine for a single task. However, for day-to-day use over the long haul, contractors must carefully choose the right equipment to get maximum efficiency and economical operation.
- Transportation: Moving machines usually requires other equipment to transport them to a new work site. With long-term rentals, transportation isn’t as much of an obstacle, though moving machines can be expensive. Carefully determining the necessary equipment reduces the likelihood that you'll need to swap machines before settling on the right model.
- Lead time: In busy economic times, there’s a high demand for construction equipment. Knowing and selecting equipment necessary for the project allows sufficient lead time to source machinery. With proper planning, the equipment will be available when you need it, and entering a long-term rental agreement ensures the machine stays on the job for the entire project duration.
Commit to a Timeline
Once your company decides long-term rentals are your best option and knows what equipment is necessary, you must commit to a timeline to ensure your selected machinery will be ready when you need it. Calculating a realistic timeline isn’t too challenging. However, it requires forethought. Here are factors to help you create a realistic timeline for your long-term equipment rental contract.
- Service dates: Committing to a timeline involves setting service dates, including taking delivery and returning machines. Service dates are significant for the construction company and the heavy equipment rental supplier alike, as these allow them to plan and depend on the machine being in or out of service at a specific time.
- Project length: Often, projects tend to run longer than planned. For various reasons, delays are inevitable in construction work. It’s better to commit to a longer project length in a rental agreement to avoid losing the machine when it’s necessary to complete a job.
- Financial situation: Cash flow can fluctuate with construction work. By committing to a precise timeline, company managers can plan for expenses guaranteed in a long-term rental contract. Ensure you can pay all your bills with no interruption from a cash-flow shortage.
- Operator training and safety: Renting long-term allows operators to complete safety training to run machines. Part of committing to a specific timeline includes building in a familiarization period at the start of the work. Experienced companies like The Cat Rental Store know this and work with contractors to add training time to the rental timeline.
- Commitment to the contract: Committing to a timeline is essential to make sure events unfold as they should. Signing a rental contract is also vital. Long-term equipment rentals are meaningful business ventures. Here, the folks in The Cat Rental Store network truly help their long-term customers.
Tips for Renting Long-Term Equipment
Renting equipment for your construction or other business needs is a straightforward process. However, you should remember some things for a smooth rental experience. Here are some valuable tips to consider with your long-term rental decision.
Ensure Proper Training
Everyone on the project who is near the equipment should be aware of how it works and maneuvers throughout the job site. Ensure every authorized person operating the equipment has completed training on how to use it safely. Thorough training and knowledge of the machines you'll be working with will help reduce downtime instead of spending days trying to figure it out. Some of the machines you might need to use will be complex or completely new to your team.
Everyone on the job site should use safe practices around the equipment. You can also ask the experienced professionals at The Cat Rental Store to help train you and your team.
Check Machine Height and Weight Requirements
When deciding on which rental equipment is right for you, double-check each machine's height and weight requirements. These specs will help you understand the maximum weight the machine can lift and the heights it can reach on your job site. It's vital to know these measurements beforehand, because they can save you the hassle of returning equipment when you realize your machine does not fit your project needs.
While you can likely find many of these measurements listed online, it couldn't hurt to confirm them with your rental dealer. Always double-check that you are renting the correct size equipment with the load requirements and features you need. Renting the wrong equipment can be a costly and frustrating error. Thoroughly discuss your intended projects' power capacity and site conditions with your rental dealer.
You should also consider the ground condition and material you'll be moving on your job site. Is the ground flat and smooth, or rough and uneven? Will you be lifting soil or concrete? These variables will help you determine which equipment is right for you.
Place Your Order Ahead of Time
Reserving or ordering your equipment as soon as you know you need it ensures on-time delivery. Waiting until the last minute puts you at risk of missing deadlines for your clients if your rental company does not have your desired equipment on hand.
Place your order far enough in advance to arrange for equipment delivery at least a day before you begin your project. That way, you won't have to waste valuable time waiting for delivery and setup. Even the most minor construction delays can affect your ability to do your job successfully.
Take Care of Your Rental
Ensure your rental unit is secure and only accessible to authorized operators. Any damage to your unit — including if you lend it to another company on your job site — leaves you responsible for paying for the breakage. You should always treat your rental equipment as if you own it, and report any malfunctions to your rental dealer.
Communicate With the Rental Company
Always communicate any questions or concerns with your rental company. This open communication channel allows you to easily address any mechanical or unit problems with your equipment. For example, you may have accidentally chosen the wrong unit for your job or arranged a delivery to the wrong construction site. In this case, you can let the rental company know, and they will help you deal with any of these circumstances.
You also need to communicate with the rental company if you finish a project ahead of schedule or realize you need an extension. Calling as soon as possible can help you avoid additional fees outside your contract.
Return on Time
Keeping your operations organized and staying on schedule means you need to return your equipment as soon as you finish using it. Depending on the equipment you rent and how long you need it, you might owe daily rent or have a strictly defined rental period in your contract.
In either case, you might be able to reduce your long-term rental cost if you return the equipment immediately after finishing your project. If you can send it back within the same day of finishing on a job site, you might be able to avoid any extra rental fees from keeping it longer than agreed upon.
Only Rent From Companies You Trust
Finding the right rental partner ensures you can expect a broad selection of equipment and good customer service. You must do your research and rent your equipment from a reputable, experienced and trustworthy company. Selecting the cheapest deal can put you at risk for faulty or malfunctioning equipment, wasting your money and making you fall behind on schedule. If you find a rental company near your job site, read their reviews and browse their testimonials to ensure they have a reliable history.
At The Cat Rental Store, you can also leave feedback about your experience and view customers' responses on our website and social media platforms to help us maintain our quality standards.
Common Mistakes When Renting Equipment
While your rental dealer will provide you with all the necessary information and walk you through your contract, there are still a few things to consider. Here are some common errors that occur with long-term equipment rentals and how you can avoid these mistakes.
Miscalculated Schedule
When renting your equipment, you may pay by the hour, day, week or some other defined period. In this case, you should create a calculation for how long you will need your rental equipment. Overestimating might result in you paying for days or weeks of a rental agreement you no longer need. On the other hand, underestimating how long you need the rental may lead to additional fees as you need to adjust your contract.
Either scenario can adversely affect your bottom line, so do your best to create an accurate timeline. If you need an extension, let your dealer know well in advance.
Besides determining your schedule, get your team prepared and organized before your equipment arrives. If your job site has tons of debris, garbage or unnecessary soil, you can plan the time to clear it out before your scheduled equipment delivery.
Staying ahead of schedule in this way will help you stay within your long-term rental period and avoid any additional late fees or having to pay for equipment you are no longer using. When you are mindful of your schedule, you can easily reap the cost-effective benefits of renting.
Taking Shortcuts
When faced with delays or supply chain obstacles, as is common in the construction business, you may feel inclined to hasten the process by cutting corners or overlooking quality control. While you might assume this strategy will save you money, it will likely lead to more long-term problems and expenses to make up for a poor-quality, rushed job.
Skipping steps in the moment won't help you meet your long-term goals. Ensure that you uphold all safety and performance procedures to avoid settling for short-term gains. Improperly handling heavy machinery can damage your project's success and even jeopardize worker safety. In addition, hiring top talent is equally crucial as choosing proper, reliable equipment.
Your project is only as efficient and effective as the workers who manage it, so make sure to hire plenty of skilled, knowledgeable workers.
Not Reading the Rental Contract
Signing any contract without reading it is always a bad idea, so carefully review each line. The rental contract will let you know how much you will pay for your rental and which equipment you will receive. If you don't understand any part of the terms and conditions, ask questions before signing the contract so you'll be fully aware of what you're liable for.
Thoroughly reading the rental contract will also give you the specifics on the rental company's cancellation and rescheduling policies, which will save you time if those situations occur.
Miscommunication With Delivery
Having your rental equipment delivered is a convenience, but don't neglect to send precise details about the dropoff location. If you don't provide these specifics, you run the risk of having your equipment delivered somewhere other than your construction site, delaying your project and deadlines. You can avoid this mistake by confirming the location with your rental company. You can even provide pictures if it is in a remote or rural location.
Skipping the Insurance
The rental agreement usually asks if you want to add insurance for an extra fee. Instead of trying to save that extra money, it's a best practice to opt for insurance. Using heavy machinery is a serious business, especially on construction sites. This added coverage will give you peace of mind during your project if any unfortunate or unexpected situations occur. In that case, you'll be thankful you paid a little bit more and added the renter's insurance for your equipment.
FAQs About Rentals
Renting long-term equipment is a significant responsibility for you and your team. Remember, many factors of your rental are subject to change based on varying details with you and your dealer. Here are some frequently asked questions you might have about the rental process.
Is Rental Inventory a Business Expense?
Yes, you can deduct rental equipment fees from your business income tax return. Ask your accountant about any other deductions you may be eligible to take, including additional reservation costs, delivery and transportation and insurance.
What Are My Financing Options?
Your long-term rental financing options for equipment can depend on a few factors. The length of your rental may be feasible enough to use a company credit card, or you can set up an account with your rental company to pay monthly. The helpful, knowledgeable staff at The Cat Rental Store can walk you through your equipment financing options before drawing up your contract.
Is Fuel Included?
While short-term rentals might include fuel costs, long-term rental periods may not. However, your rental equipment will usually come with a full tank. You can arrange to have your equipment refueled as needed, including any other fluids required to operate properly. Luckily, you can settle this process with your rental provider and discuss prepay or pay-on-return options. Depending on your equipment, contract and rental period, you may also receive a refund for fuel costs if you return the equipment fully fueled up.
Which Repairs Are Covered?
If you opt for insurance on your rental equipment, your contract should state what types of damage and repairs it covers. For example, the agreement may not cover damage that occurs from careless use or mishandling. Before signing the paperwork, you can discuss these specifics with your rental provider to avoid any unexpected, costly repairs if your equipment becomes damaged.
Always discuss the work site's conditions and terrain with your rental provider. They can confirm if the machine you're renting can handle the job.
Are There Discounts for Long-Term Rentals?
Ask your rental provider if they offer any discounts, deals or packages if you are renting long-term. You may also receive a reduction in price if you are renting several pieces of equipment at once. However, this depends on the rental company, your rental period and a few other details that you can discuss before signing your agreement. Ask your provider at The Cat Rental Store about any special offers.
Is Transportation Included in the Rental Period?
Typically, your rental agreement does not include transportation, delivery and pickup costs. However, most rental agreements won't start your rental period until the day after your equipment is delivered to your job site. These small details may get overlooked when signing your contract, so make sure you read it thoroughly.
Long-Term Equipment Rental From The Cat® Rental Store
The Cat Rental Store network links Cat rental equipment dealers across America that supply long-term agreements to the nation’s construction and other industries. The Cat Rental Store dealers work with customers like you to ensure they plan and commit to quality equipment and machinery that get the job done in the long term.
At The Cat Rental Store, you have direct access to long-term rentals involving earthmoving machines, skid steers, compact track loaders and power generators as well as over 60 allied brands of aerial lifts, concrete equipment and air compressors. All Cat rentals are safe, reliable and offer the newest technologies. At The Cat Rental Store, knowledgeable staff give you expert advice with on-site support and are available for operator training where needed.
For more information on Cat equipment and your long-term rental needs, find a location near you and rent whatever you need from people who do whatever it takes.
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