Mitsubishi HC Capital America is experiencing significant growth in rental financing for dealer-owner and dedicated rental fleets, with year-over-year increases of 150 percent to 550 percent among some of its clients.
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 for the company’s Construction Division.
Minimizing Risk
Contractors are increasingly opting for lease or rental structures over purchases 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, these 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 percent 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, said Johnson, renting or short-term leasing equipment on an as-needed basis eases demand on an equipment fleet during high-use periods. 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, he adds, 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,” asserts 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 end 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 heavy earthmoving, light earthmoving, paving and compacting, lifting and material handling, 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,” said 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.”