Should You Buy or Lease a Forklift?
Posted by: admin on October 25, 2017
Whether you are in the market for a new forklift to meet the changing needs of your workplace, or you need to purchase an entire fleet, you have probably come across the question of whether to buy or lease a forklift. The difference between the two can bring you heightened efficiency and enhance your bottom line, or it can cost you thousands of wasted dollars.
The Difference Between Leasing and Buying
The primary difference between leasing and buying forklift equipment is the lack of ownership versus ownership. To determine whether it’s better to own or not, it’s smart to first look into the aging values of forklifts. While homes tend to increase in value over time and come with many benefits over renting an apartment, forklifts depreciate over time. The most common form of thinking would say that it’s best to lease or rent a forklift, but it’s not so cut and dry. There are still many factors to consider that affect whether it’s best to buy or lease a forklift.
The Advantages of Leasing
Possibly the biggest reason why many forklift professionals and fleet owners choose to lease is the lower monthly payments. They may not have the capital to purchase a forklift outright, or pay for a lump sum down payment, but leasing offers immediate access to the most up-to-date forklift equipment on the market, with lower payments and a fixed financing rate versus a variable rate. There’s also a pre-determined replacement cycle with leased equipment, so employers have a much easier time managing the life cycle replacement. Forklift professionals have the added benefit of only paying for what they use, and not investing their hard earned cash into a piece of equipment that will become out of date in a few years, or for future work.
The Cons of Leasing
There are many benefits to leasing a forklift, but there are also some disadvantages depending on the type of business you are. Interest costs may drive the price of the forklift higher over time than the price to buy a forklift. Leasing also requires that you sign a contract that binds you to the equipment for a set amount of time. Whether you buy or lease a forklift, you need to take the time to consider what you’re willing to commit to, and how you can prepare your business for your future needs.
The Advantages of Buying
The benefits of buying a forklift live mostly in the fact that it will be rightfully yours. You don’t have to keep it for a set period of time, and can choose to sell it whenever you wish. Buying a forklift can add value to your business, and it may provide you with direct support from the manufacturer. Alternatively, you can have the equipment for as long as you want, and once you pay off the forklift, you won’t have any payments or interest.
The Cons of Buying
Buying a forklift will require you make a down payment, and if you don’t have the cash on hand, you’ll be looking at either a declined loan or a higher monthly payment and higher interest. You also will assume all responsibilities of ownership, which comes with the good and the bad. If your work no longer needs the use of the forklift, you won’t simply be able to walk away from it at the end of the contract period, like a lease. You’ll be stuck with the payments, all maintenance and repair costs, and you may have had to purchase older equipment to begin with, which will only continue to decline and depreciate.
When It’s Better to Lease
For most businesses deciding whether to buy or lease a forklift, it’s often best to lease. If you frequently use forklifts in your business, and operate forklifts more than 1,500 hours per year, then leasing will be the most efficient way to benefit from the most up to date equipment in your business, without using your capital funds or losing money on the depreciation. It’s also best to lease a forklift when you are confident that your usage needs won’t decrease in the near future. If you have a predictable pattern of equipment usage, but the type of equipment may not always remain the same, leasing is the smartest option because it provides you with the equipment you need most, for only the amount of time you need it.
When It’s Better to Buy
If your business falls in line with this scenario exactly, then it’s best to buy: you don’t use a forklift frequently in your business, and you have unpredictable utilization. Your work environment does not cause high maintenance or repair needs, and you can operate the equipment for at least 7 years with little maintenance. Also, if you have the excess capital to invest and you meet these criteria, it’s best for you to buy your forklift rather than lease. You will have the forklift for the extended, yet unpredictable, period of time that you need it, and it can function well for you without you having to pay high maintenance or repair costs.
Buy or Lease, You Need the Right Training
No matter if you decide to buy or lease a forklift, getting the proper forklift training is essential. Forklift certification training is the most effective way of preventing accidents, which not only saves lives but protects the equipment. Your fleet and operators will be prepared to avoid hazards that threaten safety and the wellbeing of the equipment, which is beneficial for both leased forklifts and purchased forklifts.
Forklift training is also required by OSHA and it can save you hundreds and even thousands of dollars in potential fines. At the very least, adequate training minimizes the amount of maintenance and the cost of repairs for equipment.
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