Should I Buy or Lease a Sit-Down Forklift: What’s the Better Investment?

Quick Summary:

Stuck in between the decision to buy or lease your next sit-down forklift? The right choice depends on your budget, fleet turnover rate, and how long you plan to use the equipment. We’re breaking down the pros and cons of both options with pricing comparisons, tax benefits, and some best-use-case recommendations. 

Leasing vs. Buying: Quick Comparison Table

Adding a sit-down forklift to your fleet can increase operator safety and comfort in many industries. If you’re in charge of shopping for the equipment, there are 2 main buying options to explore: leasing or buying. 

Both options come with their own set of costs and benefits. We’ve outlined some of the most important factors, from upfront and long-term costs to tax benefits and maintenance responsibilities, that forklift buyers 

Advantages of Leasing a Forklift

One of the top benefits of leasing a sit-down forklift is the upfront cost-savings. Most lease agreements only charge the first-month’s rental cost (and sometimes a security deposit) upfront, reducing the initial cost of the forklift by nearly 95%. 

You’ll still be responsible for monthly payments, but it’s likely you’ll end up saving a couple thousand of dollars throughout your lease agreement, especially when the maintenance terms are shorter. This payment model helps free up from working capital throughout the duration of your term that you can set aside to save or use for other business needs.  

Another advantage of leasing vs. buying a forklift is that lease agreements typically cover the cost of maintenance. When you buy a forklift, you foot the bill on all maintenance costs. If you intend to trade in or switch out equipment every few years, leasing a forklift offers the most flexibility.

Leasing a forklift if best for:

• Startups
• Short-term contracts
• Seasonal businesses
• Rapidly growing warehouses

Advantages of Buying a Forklift

On the other hand, buying a sit-down forklift can offer a greater return on investment on machines you intend to use for many years. Unlike leasing, buying gives you full ownership of the machine. After it’s paid off, there is no monthly fee or obligation to continue using it like leasing a sit-down forklift requires.  

Full forklift ownership also means you have the freedom to modify or resell your equipment as you see fit. Overall, buying is a better long-term investment if ownership is your goal. 

Buying a forklift is best for:

• High-usage operations
• Stable or mature facilities
• In-house maintenance teams
• Long-term warehouse leases

Cost Differences

Buying a forklift is a huge investment upfront, but you won’t have to worry about making monthly payments to use your equipment like you would when you lease. 

Use this table as a quick reference guide to get an idea of how much you can expect to spend when buying or leasing a sit-down forklift based on its power type:

“We started with leased forklifts while scaling and eventually bought our core units once usage stabilized. It’s a smart phased approach.”

~ Steven Marsh, Director of Ops, Delta Cold Chain

Explore a full cost breakdown of buying new, used, or leasing a sit-down forklift. →

Maintenance Considerations

Maintenance is another huge factor that can influence your buying decision. Most forklift lease agreements outline a maintenance plan, indicating that the costs and scheduling of routine maintenance and downtime support is included within your lease. In other words, you shouldn't have to pay out of pocket to fix your forklift if you’re leasing. 

Forklift ownership, on the other hand, means that all maintenance responsibilities are up to you. All expenses – from preventative serving, repairs, and downtime support – must be covered by the forklift owner.

Tax Implications of Buying vs. Leasing

Regardless of if you choose to lease or buy a forklift for your business, you could be eligible for certain tax deductions. 

Section 179 of U.S. tax regulations states that businesses can deduct up to $1.22 million of the purchase price of qualifying equipment in the year it’s placed in service. Writing that cost off right away offers an immediate reduction in taxable income. 

In addition to that initial write off, businesses who buy a forklift can benefit from bonus depreciation costs. As your sit-down forklift machine loses value over its lifetime, you can deduct a portion of that annual depreciation. 

If you bought a forklift truck or fleet that exceeds the $1.22 million limit outlined in Section 179, this bonus depreciation can help accelerate the write-off, covering the remainder of equipment cost deductions in that first year. 

If your business isn’t taking advantage of Section 179 or bonus depreciation, you may still be eligible for depreciation tax cuts under the Modified Accelerated Cost Recovery System (MARCS). This model spreads the cost of the forklift over 5 or 7 years, which is good for businesses with steady taxable income who prefer their deductions to be spread out over time. 

Leasing equipment, on the other hand, offers some different tax breaks. Since you don’t own the equipment, you can’t take advantage of depreciation deductions, but monthly lease payments are typically deductible in full as operating expenses. 

We advise you to always verify tax deductions with a tax advisor, especially if you’re buying multiple units.

Lease-to-Own: The Hybrid Option

If you’re still struggling to decide between buying vs. leasing a sit-down forklift truck, there is one more option to consider. Some dealers offer lease-to-own agreements, sometimes called capital or finance leases, that give businesses the option to own the equipment after the lease expires.

This type of acquisition model allows buyers to get the cash-flow benefits of leasing while building equity in the equipment over time. It’s especially helpful for smaller companies who need equipment now but don’t have the funds for a full purchase. 

Essentially, it’s a smart hybrid option for buyers with long-term ownership goals who can’t make the outright commitment to purchase a forklift. 

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FAQs About Forklift Leasing vs. Buying