Constructing equipment can also be referred to as engineering vehicles. This is a field that consists of all the heavy-duty equipment and machinery commonly applied in building and constriction works.
In order to have enough funds to purchase such equipment, a contractor needs to go to an equipment leasing association. There has been a noted increase in construction works, that has seen more visits to such equipment leasing associations.
Most of the big companies and a few businesses that have access to a very healthy financial stream can afford to go out and buy such equipment in cash.
Other entities have to rely on renting or leasing this equipment, depending on the contracts available at the time. This is what is manageable in financial terms. Renting is used as a short-term solution to the task at hand, while leasing is used for more jobs, as a long-term solution.
A survey was conducted which revealed a large percentage of contractors who saw no need to own this equipment outright. They prefer to conduct reviews of the two alternative methods whenever they need to use the said equipment, and coming up with the best option of the two.
Leasing or renting of these equipment enables the contractor to try out new equipment without having to pay so much, which is the case with those who buy the equipment outright. There is also the condition observed by the suppliers where they expect a contractor who has leased their equipment for more than six months to make full payments for them.
In cases where there are three contractors vying for the same tender, the one who happens to own the equipment in his possession needs to only think of the interest amount spent in buying the equipment when he costs the job.
If one of the other contractors has chosen to lease the equipment he has in place for the job, he has to factor in the recurring monthly expenses in servicing the lease payments, in his bid for the job. And in case the last contractor had chosen to rent out the equipment he has for this job, he only needs to think of that rent amount when he is doing his bid calculations, and does not have to worry about the equipment of any future expenses, even if the bid does not go through, since lack of usage does not incur any extra expenses.
Additional complications arise where there are a wide range of finance plans, which have more options that attract the contractors, of which the repayment terms can last between three to five years.
The major equipment manufacturers have their own financing departments, through which contractors can leas their equipment directly. They cover a big portion of the market.
Banks also have similar leasing arrangements. Other banks avoid such arrangements, due to their risky nature.