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No two businesses are alike. Even direct competitors have different business goals, different needs and different dynamics to their business structure. And, everyone likes to believe they’re an expert offering advice, but only you can decide what the best practices are for your company. What may work well for one could be the wrong decision for another.
So, what’s the best way to invest in a forklift? Talk to your accountant about your business structure and then make your decision. But to help you make an informed choice, here are the pros and cons of leasing, financing or renting your forklift(s).
LEASING
Pros:
- Lower up-front costs allow you to lease with little to no money down
- Just like a car lease, the residual value can keep your monthly payments down
- At the end of your lease, it’s your choice if you want to keep your forklift or upgrade to the latest model
- Working a maintenance plan into your lease can help you to plan your monthly expenses
Cons:
- Work environments such as chemicals or exposure to salt can significantly affect the end-of-lease value
- Limits on hours of use over the term can change the end value or cost you out-of-pocket
- Most leases run longer than the manufacturer’s warranty, making the last few years of cost unpredictable without an extended warranty
- Unforeseen changes in your material handling needs can make the leased unit ineffective for your business
FINANCING
Pros:
- Many times, this is the least expensive cost of ownership
- You own the forklift at the end of the finance term
- No concerns about the type of work your lift truck is exposed to
- You can choose when the best time is to change your forklift
- Keeping your forklift for its full life means eventually operating it without a fixed monthly expense
Cons:
- Saving money by deciding against a maintenance plan can greatly affect month-to-month costs
- Just like with a car, selling your lift truck during your finance term could put you in a position of owing more money than you forklift is worth
- Older forklifts tend to need repairs more often than newer ones, with bills that can be very costly
- Selling your forklift can prove to be frustrating and time consuming
LONG-TERM RENTAL
Pros:
- Your monthly payment will include the forklift, maintenance and repairs
- Great way to “Test Out” to see what lift truck is right for your company
- Little to no upfront cost
- Liability to your insurance company will be reduced
- Upgrading or changes in your lift truck needs can be dealt with quickly
- No payment if you return the forklift during seasonal slow-downs or changes
Cons:
- Generally a more expensive option than financing or leasing
- No option to buy or sell your unit
- Transportation charges for units that are frequently changed out or returned
Remember, it’s your decision for what is right for your business model. You should always consult a material handling professional to get advice on options, and then use your common sense.