![]() ![]() ![]() ![]() Leases are typically accompanied by a maintenance and service schedule. How do you maintain your HDD equipment? Answering that question can also help determine whether you should rent, lease or buy your next piece of equipment. “Sometimes an outright purchase is the best option, but they should think in these more specific terms to determine what will make it most beneficial for them.” Consider maintenance “More contractors are thinking in terms of total cost of ownership, accounting for operating costs and residual values,” Schroeder said. But, along with ownership comes the sole responsibility for maintenance, while many leases have specific maintenance schedules to which the lessee must abide. #Horizontal directional drilling machine on rent free#While leases sometimes have restrictions on things like hours of use, outright ownership is free of those variables. If you have a consistent daily need for a specific machine and have the cashflow necessary to cover initial ownership costs, outright purchases are typically the lowest-cost option for the contractor who’s planning more for the long term. “A lease is almost always on a new piece of equipment, whereas an rental purchase option (RPO) might be on a slightly used machine.” Buy “If I know I’m going to have work that will require a piece of equipment for the next two years, I can lease it and I’m not necessarily tied to it, but I can buy out the lease if I want,” Schroeder said. A lease provides the contractor the flexibility to purchase the equipment outright at the completion of the deal, or he or she can return it if it’s no longer needed. Prices are usually not as high as when renting, but the financial obligation is often longer in duration. ![]() When leasing a piece of equipment, a contractor retains the ability to purchase it outright at the maturation of the lease. Many renters wind up moving forward with a purchase.” Lease “You may also be able to sign a rental purchase option (RPO) agreement so you can buy later, with your rental payments going toward the cost of the machine. You may pay a lot more to rent than you would if you were leasing or buying, but you have a specific goal in mind, you know specifically how you’ll use that equipment and will just pay your tab and be done,” Schroeder said. “A rental agreement is a short-term play. You probably still have the flexibility to purchase outright later on, but you’re not bound to a specific long-term time period like when financing or leasing. You may pay considerably more but renting helps prevent a long-term financial commitment. If you have a specific job that requires a little extra horsepower or a specific piece of equipment that you normally don’t use, renting is likely the best option for you. Here is an overview of each of the three purchase options - rent, lease and buy - and what circumstances can make each the right choice. On the other end of the spectrum, a short-term rental agreement may carry a much higher cost, but the contractor may only need that piece of equipment for a much shorter duration, thereby justifying that higher price. Outright purchases typically spread the machine’s cost over a longer duration, but it’s a long-term financial commitment. In general, the more a contractor commits to ownership of a specific piece of equipment, the lower the overall cost. It should be a high priority today to take machinery costs into account, and we’re seeing more contractors make purchase decisions based on what they need to do to remain successful.” “This is becoming more important as more contractors start to think in terms of specific operating costs on the jobsite. Consider these variables when making a purchase decision,” Schroeder said. We work hard to consider how our customers want to do business, how they manage cash flow and how tolerant they are for risk. “The nice thing about purchasing equipment today is you have so many options with financing rates, rental terms and purchase options. In other words, identify what you need and how long you need it. Time is a huge factor in general, the length of time over which you’re financially responsible for a piece of equipment and how long you’ll be using it on the jobsite help determine which strategy is best, according to Vermeer Sales Manager for Utility Infrastructure Commercialization Lee Schroeder. Job size, duration of use and overall cost are all variables that can contribute to which procurement strategy is most effective. How you secure and retain that equipment itself - from tooling to the largest HDD machines - can be key to completing a job. Having the right equipment makes a difference in managing a successful, productive horizontal directional drilling (HDD) jobsite. Factors to consider the next time you need HDD equipment ![]()
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