Rental red flags

Rental red flags

Own the process by knowing what to do before you need a loaner.

January 23, 2015

Before making a new equipment purchase, many contractors can benefit from renting that piece of equipment first. An up-to-date equipment selection and less down time are all luxuries that contractors can expect when opting to rent.

“You’re getting equipment that is less than a year or two old and has less than 1,000 hours on it, which means it is less likely to have a malfunction or break down,” says Bryan Heinrichs, rental manager for Burris Equipment Co., in Illinois.

And if problem does occur with the equipment, a contractor can expect a rental company to have them “either back up and running, or have another piece of equipment in less than two hours,” Heinrich says.

Renting also provides an opportunity for contractors to try out the latest equipment models and different attachments that might not make sense to add to their existing fleet, but can allow for more versatility in job applications.

“There are a lot of different options out there, not only between brands but different sizes, different tires and tracks,” says Ben Kelln, rental manager for Bobcat of the Rockies.

Budget beyond the sticker price.

One of the greatest cost-saving benefits to renting equipment is that contractors can factor the cost of renting into the bid for the job. Kelln cautions, though, to add about 25 percent to the rental rate to make sure you’re covered for all of the incidentals.

“Contractors don’t understand the extra costs involved in renting a machine,” he says.

“Most will look at the bare bone rate and do their bid at that rate, not realizing the additional fees that go with it.”

Those fees will vary among rental companies, but based on industry standard, contractors should expect around 12-15 percent added onto the rental rate for a damage waiver and 1-2 percent for environmental fees, as well as taxes, potential delivery and pickup fees, trucking fees to transport equipment between sites, fuel charges and cleaning fees, Kelln says.

Pick brains.

Many of those fees are avoidable and result from misuse. Most rental companies will demonstrate the equipment for a contractor, but it is then that contractor’s responsibility to ensure that employees are familiar with it.

How much companies grossing less than $200,000 a year spend annually on rental equipment.

How much companies grossing more than $200,000 a year spend.

Source: 2014 Lawn & Landscape State of the Industry Survey

“When I deliver a machine directly to the customer’s business or jobsite, I do what I call an in-service or a walk-around,” says Jimi Martin, salesman for Perimeter Takeuchi in Georgia.

“We start at one corner of the machine and go all the way around, going over the dos and don’ts.”

Contractors must also make sure they are choosing the proper equipment for the job. Some machines are twice the capacity of others, and using the wrong size or model often causes damage. “If a customer gives us a call and explains his job, we will absolutely offer our expertise to make sure they are getting the right equipment,” Heinrichs says.

“At the same time, if a customer calls us for an 8,000 pound excavator but doesn’t tell us what he’s doing with it, we are still going to rent it out. Contractors should fully understand the limitations of the equipment and make sure they have the right piece.”

Understand coverage.

Contractors should also fully understand the details of the damage waiver. Often, the waiver does not cover incidents that can be considered the fault of the operator or negligence.

“We have a $1,000 deductible and it is per occurrence,” Heinrichs says. “So if you break the window out of a machine and bend the hydraulic cylinder of the machine, that’s two separate deductibles.”

Contractors who frequently rent equipment may decide to add a rental equipment policy to their business insurance. Contractors can list a rental company as a loss payee or an additional insured for the dollar amount of the equipment to avoid paying waiver fees each time, Kelln says.

“That 15 percent damage waiver really adds up,” Heinrichs says. “So you have to do some math and see how much you’ve paid in damage waiver fees and compare it to how much your insurance company would raise your annual rate, and see where you’d be in the black.”

Work with your dealer.

If a contractor finds that they are constantly renting equipment or that they are using certain equipment more often than usual, some dealer’s rent-to-own programs can ease the transition.

Bobcat of the Rockies offers a rental purchase program where contractors have the option to put the money they’ve paid in rent toward a purchase. Contractors then have an investment in the dealer as well.

“You’re going to be renting from the same person you’re going to be buying from, and the same person you’re going to be getting your service from and buying parts from. It’s a way to build a relationship there,” Kelln says.


The author is a freelance writer based in Louisville, Ky.