Once you’ve picked the make and model of your forklift, you need to decide whether forklift rental, leasing or buying is right for you. Each of them have their own benefits and are suited to businesses with different needs. But how do you know which is right for you?
In this article, we’ll look at some of the pros and cons of each method, so that you have the information you need to decide between leasing, buying or renting a forklift.
First, we’ll look at the short-term option of the three, forklift rental. Renting a forklift is very similar to leasing one, except the term is shorter and there’s often more flexibility in the forklifts you can pick.
The length of your rental period will depend on who you rent your forklift from, and what they offer. Generally, you’ll be able to choose from short or long rental periods.
Benefits of Forklift Rental
There are a couple of major benefits to renting a forklift over leasing or buying one, including:
- No large upfront payments
- No maintenance costs
- Wider product range
- Flexible time periods
- No finance required (usually)
Another benefit of forklift rental is that your bookkeepers may find it easier to use a forklift rental to reduce taxable income, rather than calculating depreciation on a purchased forklift. Of course, there are some other things to consider.
For example, if you plan on using the forklift for long hours or over a long period, then buying or leasing will generally be more cost-effective. And, rentals will usually need to be returned in the same condition as when you first got it. So any accidental damage or excessive wear-and-tear can end up costing your back pocket.
In short, if you only need your forklift for a short, busy period of a couple weeks or a month, then forklift rental is probably a good choice. If you need a long-term option or want to use the machine as a business asset, then leasing or buying is a better choice.
In between renting and buying, we have leasing. Forklift leasing is considered the best option for most businesses, with around 80% of big businesses choosing to lease forklifts over buying them. There are a few reasons why leasing is so popular, including:
- Lower, predetermined payments
- Latest models & features
- No/reduced maintenance costs
- No/lower upfront cost
The reduced and predictable payments (whether weekly, fortnightly or monthly) make it easier to manage your books. While the low upfront payment (if there is one at all) reduces the initial hit your back pocket will take.
Although there are a number of benefits to leasing a forklift, rather than buying or renting one, there are a few things to consider.
Usage and resale value: If you’re only going to be using the forklift a few hours a week, and can plan for low maintenance costs, then leasing may not be the right choice for you. Forklifts do have a long life, especially so if you’re only using it for a few hours a week, and your needs aren’t likely to change in the upcoming years, then buying will generally provide a better ROI than leasing.
You also can’t borrow against or use lease forklifts as collateral. As they are still owned by the leaser. Whereas you can use a forklift you bought outright to loan against or resell,if needed.
Maintenance risks: While you do get the benefit of someone maintaining and servicing your forklifts, you do run the risk of them doing a subpar job. Luckily this is easily avoided with a little research and review checking before signing the lease.
Overall costs: The other major consideration is your overall costs. Lease forklift payments are easier to manage, and have a low upfront and monthly cost.But if you plan on buying the forklift at the end of the lease and owning it, you will often pay more (in total) than if you had bought it outright. Of course the actual final cost will depend on your contract, and could still be a viable choice if you get a good deal.
As a general rule, if you plan on getting good use out of your forklift, and want to be able to replace your fleet regularly with the newest models, then leasing is the way to go. If you only need forklifts for a short busy period, consider renting. Whereas, if you have the capital, or need to own the forklift for tax reasons, then buying is the best choice.
Buying a Forklift
Finally we have the long-term option, buying. The main benefit of buying a forklift is fairly obvious—you get to own it outright. Knowing you own a piece of machinery can often give you peace of mind, and some business owners will choose to buy all of their capital equipment outright, simply to know they own the gear. But this doesn’t apply to everyone.
That said, there are a few other benefits to buying a forklift, rather than leasing or renting, including:
- Return on investment
- Ideal for tough, rough workloads
- Easier to add to existing fleets
- Tax benefits & deductions
Possibly the biggest benefit to buying a forklift outright is the return on investment. Buying is realistically the only option where you can resell the forklift to recoup expenses. You can also use them as collateral to borrow against, unlike leased or rental forklifts.
Owning a forklift is also a good idea if you need it for tough, heavy-duty work where it’s likely to get a lot of wear-and-tear. Many rental and lease contracts have conditions included over hours worked and the condition of the machine. If the work you’re doing is likely to exceed what the rental company considers ‘reasonable’ then you may end up paying extra. Making the ROI on a leased or rental forklift lower than a purchased one.
Another often overlooked factor is your existing fleet. Purchasing a forklift, whether it’s new or used, makes it easier for you to find a model that is the same or similar to your current fleet. This reduces operator training for new machines, and lets you make use of any existing attachments and accessories.
In the end, it’s generally a better choice to buy a forklift if:
- You only need to use it for a few hours a week
- Don’t foresee a need to change your equipment for 5+ years
- Need the forklift to perform heavy-duty, rough work
- Want peace of mind knowing you own the machine
But, if you only need the forklift for a short burst in business, then a rental forklift is probably a better choice. Whereas if you don’t have the capital to purchase a machine outright, but you still need a long-term option, then leasing is right for you.
At the end of the day, deciding whether you should enter into forklift rental, leasing or buying will depend on your business needs and budget. Luckily, there is a great range of new and used forklifts available to rent, lease and buy. Or, if you’re looking to buy a cheap used machine, try your luck at a forklift auction.