Construction Site
Construction Site

Construction Leasing Equipment

If you are involved in the construction industry, you are aware of the considerable up-front investment you are likely to be making in any given project.

Not least of those costs is in the acquisition of the plant and machinery likely to be needed. Every construction contract you win might demand the use of new or improved plant and equipment, whilst the constantly-changing directives of the European Agency for Safety and Health at Work (EU-OHSA) might mean your having to replace outdated plant and machinery.

When considering how to finance these acquisitions, one of the basic questions is whether to buy or to lease. Here at ACF Direct, we may help you secure either of those solutions – at competitive market rates.

Finance solutions available

Hire purchase

It is entirely possible to acquire the construction equipment you need by way of a hire purchase agreement.

Although you are not going to own the equipment immediately, 100% ownership passes to you once all of the hire purchase instalments have been paid. These typically begin with the down payment of a minimum 10% deposit, and equal monthly repayments until the balance is repaid.

A hire purchase agreement might typically last for between one and five years – with the repayments determined by the size of the deposit you have made in down payment and the length of the hire purchase agreement.

In the fast moving world of the construction industry, however, you might prefer not to take on such an immediate commitment to own the equipment you need. In that case, construction leasing equipment options are available.

Finance lease

If you decide not to buy the equipment, a finance lease provides a way for you to acquire exclusive use of what you need throughout the period of a long-term finance lease.

In this case, the required construction equipment is bought on your behalf by a finance company, which leases the plant or machinery to you on a long-term lease – typically one that extends for the estimated economic working life of the equipment.

At the end of the agreed period of lease, you have 2 main options:

  • Enter into a Peppercorn rental and carry using the goods. This is normally equivalent of one monthly rental per annum.
  • Sell the goods on behalf of the finance company and typically retain 95% of the Sales Proceeds

Operating lease

Just as the term suggests, this is a lease granting you an exclusive right to use the leased equipment for a specified period of time – this typically runs for between one and five years.

You are responsible for maintenance of the equipment throughout the duration of the agreement unless you enter into a maintenance agreement.

At the end of the operating lease agreement, the construction equipment is returned to the leasing company, which is likely to have specified the condition and state of repair in which the plant or machinery is returned.

In order to learn more about the technical differences between finance and operating leases, you might want to refer to guidance published by the Financial Reporting Council (FRC).