Your company is in the process of acquiring a service or bucket truck for utility work and you’ll need to stock that vehicle with the proper lineman tools and equipment.
This brings up a common question in the industry: Should I rent or buy the big-ticket pieces of equipment?
It’s trickier nowadays, though, with historic inflation rates and the budgetary balancing acts U.S. businesses currently face as their money decreases in value.
The Upside of Renting Equipment
There are plenty of good reasons to rent lineman tools and equipment.
A smaller company in its early stages might need to watch its capital expenditures on those items, instead focusing on costs such as labor and materials in the short run. Renting allows them to expense the equipment rentals to the overall cost of the job.
Another company might already have its own fleet of blocks for projects of a certain size, one of those jobs might get extended and turn from three to four miles, which is another good reason to lease blocks.
Other companies might want to expand their line of business. A company that mainly works in distribution could test the waters in the transmission business and use rental equipment until making a full capital-expenditure commitment.
With blocks and other large pieces of equipment, renting is often suggested if you are not using them at a rate of at least 65 percent of the time over the lifespan of the asset. Even then, you will need to figure out if the asset is worth owning, after taking into consideration its regular maintenance, repairs and transportation costs. In addition, rental equipment is usually younger and preventatively maintained.
Time to Buy Equipment
Here are some signs that you’ll want to make a substantial purchase and own or finance certain lineman tools and equipment.
If you’re regularly using something that you’ve rented for about two years and expect to continue long-term usage, it’s much more economical at that point to make a purchase.
Additionally, if you’ve lost a job because you didn’t have the right equipment on hand, you’ll know that it’s better to have access to certain items immediately.
In cases where you have enough foresight to know that you’ll regularly need a significant piece of equipment down the road, financing a purchase, or renting to own is another option. We offer Custom Truck Capital for both buyers and renters to consider as a third option. Customizing a finance option to meet your specific needs is currently an attractive option, because while inflation keeps increasing, interest rates are still low, for now, but the Federal Reserve Board is expected to increase those benchmarks more than once this year.
Now could be a beneficial time to lock in fixed-rate financing on something your company is certain to use a few months out. During that time, rental rates could have also creeped up significantly. Meanwhile, if a purchased item isn’t used as much as anticipated, there is a sizable resale market where it can be sold to recoup expenses.
Whatever you decide between renting, buying and financing top-tier lineman tools and equipment, Custom Truck One Source has the right fit.