Mitsubishi HC Capital America has experienced significant growth in rental financing for dealer-owner and dedicated rental fleets, with year-over-year increases of 150% to 550% among some of its clients.
Availability of new equipment, rising interest rates and the current economic climate are fueling the increases in the construction equipment rental and leasing markets, according to Chris Johnson, senior vice president for Mitsubishi HC Capital America’s construction division.
Minimizing Risk
Contractors are increasingly opting for lease or rental structures over purchases to protect themselves from market fluctuations, according to Johnson. “In a highly dynamic sector like construction, renting and leasing can provide a cushion from unforeseen financial downturns,” Johnson said. “The flexibility of these financial solutions makes it easier for businesses to handle the rise and fall of market forces.”
Johnson added that rental and leasing options allow for an increase in 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 the project at hand. Not having a long-term financial commitment also eliminates the risk of expensive purchased machinery standing idle between projects, depreciating in value and becoming obsolete.
Likewise, renting or short-term leasing equipment on an as-needed basis eases demand on an equipment fleet during high-use periods, according to Johnson, who added that contractors can bid with more confidence on projects knowing they can access the right equipment if they get the job but at zero risk if they’re not awarded the bid. Renting and leasing provide cost-effective ways to avoid equipment obsolescence, Johnson said, 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. In the current economy, it’s smart business,” Johnson said.
Integration with ENGS Commercial Finance
Johnson expects the increase in its construction business to accelerate following Mitsubishi HC Capital America’s recent integration with ENGS Commercial Finance. The company now has more than $7.5 billion in owned and managed assets.
“We see first-hand that selecting and aligning with a true strategic partner can help a construction business grow significantly,” Johnson said. “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.”
