What You Need To Know About Leasing Construction Equipment

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What You Need To Know About Leasing Construction Equipment

27 January 2019
 Categories: , Blog


Construction equipment leasing is a great way for a company to see that it'll have all the resources it requires to handle projects. You may be curious, however, about how the process works. Let's take a look at some of the common questions that come up about construction equipment financing and leasing.

Who Owns the Equipment?

For the term of the lease, legal ownership of the equipment remains with the business that leased the equipment to you. Some lease agreements include what is called a "residual." This is a clause that permits you to purchase the equipment at the end of the term or once a certain amount has been paid on the lease. If you'd like the option to take ownership of the equipment at the end of a lease, make a point to ask for this option up front.

There is also what's called an abandonment lease option that allows the lessee to buy the equipment at the end of the term for $1. The logic in this is that a notable amount of depreciation has likely occurred, and it allows the leasing firm to part without the equipment without creating too many legal hassles.

How Does Financing Fit In?

Construction equipment financing can be used alongside a lease agreement to see that you'll have the working capital required to assemble resources for your company. There are several ways to do this, including getting a line of credit from your bank. Many leasing companies also offer their customers access to financing options. Financing a lease through a third party can be beneficial because it ensures that payment issues won't lead to repossession of the equipment.

Every company will have its own requirements, but you'll likely need to produce at least the last two years of tax returns for your business to prove you have a steady stream of income. It's also a good idea to check your company's credit score prior to looking into construction equipment financing.

Why Lease Equipment?

The primary argument for leasing equipment is to see that your working capital will go further. Making outright purchases of equipment requires a significant up-front commitment of cash. By leasing the equipment, you can acquire more items for the same initial amount of money. This will allow you to take on bigger projects, and then the money from those jobs can be used to pay the leasing fees.

For more information, reach out to companies like LeaseSource.