If you need a forklift, you have two different options available. Firstly, you can purchase one outright, which means the forklift is yours straight away. The second option is to search for forklift financing, which is usually done through leasing. Which one of the two is better, however, varies depending on your own needs.
Disadvantages of Buying a Forklift
As soon as you purchase a forklift, all risks of ownership fall on your shoulders. Repairs, maintenance, servicing, insurance, taxes, and so on, are all things that you have to pay for. Should you buy a forklift through financing, then you also have to take out life cover for the duration of your loan, gap cover just in case, make interest payments, and more. Consider, on top of that, that your forklift will depreciate significantly in value, and you will see why buying is perhaps not the right choice.
Leasing a Forklift
When you lease a forklift, you take out a different type of forklift finance that is somewhere in between taking out a loan for purchase and hiring the forklift. Technically, at the end of a lease period, you can make a balloon payment and own the equipment. Practically, however, very few people do this. Instead, they return the vehicle and start a new lease agreement on a newer model.
Because you lease, most of the ownership risk is on the owner, which is the company you lease from. This means a lot of additional costs are down to them. And while they are factored into your monthly payment, it does usually work out as a lot cheaper than if you were to purchase a forklift and take out finance for it.
Another benefit of leasing is that it is usually a lot easier to add more vehicles to your fleet, should you have a requirement for more forklifts. That is another way in which you can save on your capital. No longer do you have to put down massive deposits or even a full purchase price. Additionally, you are likely to be able to deduct your lease price from your taxes, because it is an operating expensive, which in turn makes your equity ratio look better.
However, do remember that, should you purchase, you will have a significant asset to put against your name. You may also require Capex approval for this. That is a consideration to make.
What Makes a Good Forklift?
Besides having to decide where to purchase out right, purchase on finance, lease, or rent a forklift, you also have to make sure you choose the right forklift. This is all down to being practical and finding something is functional. Look into things such as emission levels as well as the size of the engine and the type of fuel it uses. Other important factors include:
- How safe the forklift truck is to operate.
- How much experience the supplier has.
These two things matter regardless of how you intend to pay for your machinery.