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July 5, 2023 – Lender Mitsubishi HC Capital America is seeing year-over-year increases of 150%-550% in rental financing from some dealer-owners and dedicated rental fleets of heavy equipment.
Availability of new equipment, rising interest rates, and the current economic climate are fueling the record increases in the construction equipment rental and leasing markets, according to Chris Johnson, senior vice president of the company’s Construction Division.
Minimizing Risk
Contractors are increasingly opting to lease or rent instead of buying in order to protect themselves from market fluctuations, said Johnson. “In a highly dynamic sector like construction, renting and leasing can provide a cushion from unforeseen financial downturns,” he said. “The flexibility of these financial solutions makes it easier for businesses to handle the rise and fall of market forces.”
In particular, those options allow increased cash flow.
Rather than tying up cash with a large upfront outlay and financing charges, renting can recover 100% of the cost of equipment with revenue generated by a project.
Not having a long-term financial commitment also eliminates the risk of expensive purchased machinery standing idle between projects, depreciating, and becoming obsolete.
Likewise, said Johnson, renting or short-term leasing equipment as it’s needed eases demand on an equipment fleet during high-use periods.
Contractors can bid projects with more confidence, knowing they can access the right equipment if they get the job – but at zero risk if they don’t.
Renting and leasing provide cost-effective ways to avoid equipment obsolescence, he added, and a way to incorporate more technologically advanced and efficient machines into a fleet.
“Our flexible financing solutions have made an enormous difference in customers’ ability to rapidly grow their rental fleets and businesses,” said Johnson. “In the current economy, it’s smart business.”
Integration with ENGS Commercial Finance
Johnson expects the increase in its construction business to accelerate following the company’s recent integration with ENGS Commercial Finance and Mitsubishi HC Capital (U.S.A.).
The company now has more than $7.5 billion in owned and managed assets, and greater ability to expand lending resources to the construction industry.
The Construction Division’s experienced team of finance professionals provides OEMs, dealers, and users throughout the United States and Canada with a single source of financing, without the restrictions of traditional financing.
Solutions include dealer inventory financing, leases, and loans, as well as customized financing solutions for dealer-owned rental fleets and dedicated rental companies through direct financing or private label programs.
The company finances a variety of construction equipment for lifting and material handling, heavy earthmoving, light earthmoving, paving and compacting, drilling and trenching, and ancillary uses.
“We see first-hand that selecting and aligning with a true strategic partner can help a construction business grow significantly,” added Johnson. “A strong partnership will take a company into the future, fully understand its clients and their customers’ buying cycle and provide market intelligence to make better decisions.”
