Forklift Purchasing Options: Lease, Buy, or Rent?

October 25, 2022 - Last modified: October 24, 2022 @ 5:37 pm

A well-running forklift is essential to your warehouse or construction operation. So when your lift truck shows signs that it is past its prime, you naturally think about getting a new one. At the same time, you know a new lift will not come cheap. If you are casting a nervous eye on your company bank account, take heart that you may find forklift purchasing options that will not burn a hole in your wallet.

Reasons You May Need a New Forklift

The warehouse industry is picking up in activity thanks to the boom in e-commerce. More people are opting to order their goods online, which means more products are hitting warehouse shelves and require lifts to load them onto trucks bound for delivery hubs and homes. Factor in the construction of more warehouses and distribution locations, and the need for more forklifts becomes apparent.

You may want to take advantage of technological advances that make lift trucks more energy efficient. Studies have shown that lifts equipped with higher energy efficiency have a 20% to 30% longer lifespan than lifts with internal combustion engines. These new forklifts can also save on fuel costs. Additional technical upgrades include lifts with rollers to increase mobility and automation to guide lift trucks without the need for human operators.

Naturally, safety in your warehouse or yard will be a major concern. OSHA statistics found that 85 workers per year die in forklift accidents. While training your workers in proper lift operation can avoid tragic outcomes, making sure your lift truck is in functioning order is also critical. Fortunately, technical advances in forklift models also include new safety features to help prevent worker injury and death.

3 Forklift Purchasing Options That May Benefit Your Business

You probably have a good reason to acquire a new lift, but you still worry about whether you possess the funds to go through with a purchase. You may also want to bet on a sure thing when you purchase a lift. Sometimes forklifts experience unexpected breakdowns and extended downtime. Fortunately, you have three forklift purchasing options for getting a new lift truck into your yard. While each of these choices has its pros and cons, you may find one is the better fit for your business.

1. Buy a Forklift

One option is to look for a forklift for sale and buy it. After considering what you need in a lift, you can conduct research on the lift trucks available on the market, taking into account factors such as size, carriage, counterweight, mast, and lifting mechanism. Once you have found a seller and arranged payment, the new lift is yours to start what you hope will be a long period of service.

The Benefits of Buying a Forklift

With some due diligence, you might discover a lift truck that performs as you had hoped or even better. Choosing to buy a lift gives you several possible benefits, not only because you could end up with a dependable lift. You may reap some economic positives from your purchase. Here is a look at possible upsides of buying a forklift.

Owning the Lift

You might have lift ownership as a forklift purchasing goal since you know the lift is yours to keep without another party having a claim on it. Ownership also gives you the freedom to repair it with your preferred work team. In addition, you can modify the lift to fit your operations.

Having the Lift as an Asset

Capital equipment is what companies use to create products, offer services, or move or deliver goods. As a business owner, you may list capital equipment on your books as fixed assets. In the construction industry, forklifts count as capital equipment. In addition, a well-functioning lift truck has good resale value, so you might sell your lift off for a sizable amount at a later date.

Taking Advantage of Tax Benefits

Buying a forklift for sale could also qualify you for certain tax breaks. According to the IRS, businesses may deduct the cost of machinery they purchase within the first year. Still, it is possible that your lift might not be eligible for this benefit. You could look at filing a deduction for depreciation as an alternative.

The Downsides of Buying a Forklift

Companies that are not on solid financial ground could face problems financing a forklift. If your business lacks the money to buy a lift truck, you might fund it with a line of credit or a loan. However, you should have enough steady income to sustain debt payments and maintain other business expenses. Otherwise, you could tie up capital in servicing your debt. In extreme cases, debt can contribute to bankruptcy.

Even if you find a forklift for sale that meets your technical requirements, you might still find it does not meet your needs later on. Sometimes shortcomings are not evident until you have had some time to operate your lift truck. You may end up having to sell or offload it. Regardless, you will likely lose money from the purchase.

2. Rent a Forklift

A cheaper alternative to buying a forklift is to contract with a company to rent a forklift for your business. This allows your business to use a forklift for a period of time in exchange for paying rental fees. While you may have the option to renew the rental if you wish, at some point you will have to return the lift to its owner.

The Benefits of Renting a Forklift

Renting a lift truck as your forklift purchasing option may be beneficial because of the reduced costs involved. The sum of your rental payments will almost certainly be lower than the money you would pay for buying a lift, at least in the short term. A forklift rental also provides your company with the ability to meet fluctuating needs without buying a lift truck that will take up space for long periods. Here is a look at three possible upsides for your company.

Renting for Seasonal Needs

Companies have different seasonal peaks. The construction industry, for example, tends to have its peak activity in the summer months, in contrast to winter when construction work substantially decreases. However, some work peaks are not predictable. A sudden burst of local economic activity may put abrupt demands on your work fleet.

Renting a lift could deal with planned and unforeseen increases in work activity. Owning a new lift truck might not help your business if it cannot generate revenue during less active months. Instead, you can rent a lift only when necessary and then return it to the owner when your work slows down.

Experimenting With Different Models

Construction companies and warehouses looking to upgrade their lift fleets often have to sort through the latest models to figure out which type will best serve their operations. Fortunately, a forklift rental takes out a lot of guesswork. Renting different lift types to see how well they serve your company gives you the chance to experiment before buying a lift to own.

Checking for Increases in Productivity

You might not want a forklift that only works as well as the lift trucks in your current fleet. Given the various advances in lift technology, you might have set goals to increase load capacity. You probably also want your new lift to handle more rugged terrain and longer distances. Renting forklifts lets you gauge their work performance to see if there is a tangible increase in your business efficiency.

The Downsides of Renting a Forklift

As a forklift purchasing option, renting a lift truck can involve a more complicated arrangement. There are different provisions in a rental agreement that could become costly if you are not careful. You might also not get the efficient lift that you hope for. Consider asking a rental company about the following subjects before committing to a forklift rental:

• How much the agreement costs: Rental costs may actually be more expensive if you only rent the lift for a short period. Also, check your contract for costs according to lift type as well as maintenance fees.
• The last inspection of the lift: Be sure that any forklift you rent has undergone a recent inspection. Receiving inspection records from the lift owner may help your workers if you want them to inspect the forklift.
• How to operate the forklift: Make sure that the rental company shows you how to operate the lift and supplies you with instructional papers.

A rental agreement could indeed help you minimize your costs compared to buying a lift. Still, some companies rack up expenses because of unexpected costs from a rental agreement. You may have to devote serious time to negotiating with the lift owner before committing to a rental.

3. Lease a Forklift

People are generally familiar with leases as ways to rent apartments to tenants. However, companies also lease construction vehicles to businesses. While a rental agreement is often for a short span of time, a forklift lease can go on for months or years. As with a rental agreement, you will pay a certain amount in fees to lease a forklift and return it at the end of the contract.

The Benefits of Leasing a Forklift

Some of the advantages you enjoy from forklift leasing are similar to the benefits of a forklift rental. You can try out new lift types on your worksite without committing to the purchase of a particular model. Once the leasing agreement is over, you can return the lift. However, this kind of forklift purchasing arrangement also gives you several additional options.

Swapping Out Your Lift

With a rental, you will probably have access to a single lift that you will return once your agreement is over. By contrast, many leasing companies allow their clients to exchange a leased product for a more up-to-date model. In your case, your forklift lease could let you swap out an older lift for a new lift truck that includes greater load capacity and energy efficiency.

Taking Advantage of Tax Breaks

Like buying a lift, a forklift leasing agreement could help you secure tax benefits. The IRS permits businesses to deduct the cost of leased equipment from their taxes. If your arrangement is a conditional sales contract, you might see if you can deduct the expense of your lift. Many states also allow companies to deduct leases on their taxes.

Purchasing Your Leased Lift

A feature of many leasing agreements is a provision to buy leased equipment at the end of a term. A forklift lease that lasts for several years could give you enough time to test the capabilities of a lift. By then, you will probably feel comfortable about deciding whether or not to buy it.

The Downsides of Leasing a Forklift

While you may buy a lift at the conclusion of your lease, your combined costs of a lease and a forklift purchasing fee will likely exceed the amount of a simple purchase. As with a rental agreement, expenses within the lease agreement could prove burdensome. For example, you might incur a penalty fee for keeping the lift longer than the lease period.

As with a rental company, you should consider asking the lessor about the maintenance record of the lift. A lack of recent inspections means a leased lift may be at greater risk of malfunctioning. You may also consider asking the lessor to have a provision in your forklift leasing agreement for a backup lift in the event your current lift breaks down.

Let Forklift Inventory Help You Find Forklift Purchasing Options

The options of buying, renting or leasing a forklift offer great flexibility for any business that needs to move heavy loads. Still, you need to know if a new lift can truly benefit your operation. Forklift Inventory is ready to present you with different forklift purchasing options for your business. Let us help you contrast the various lifts on the market so you can feel confident that you will choose a dependable lift under the best terms possible for your business.

Find New & Used Forklift for Sale Today.

Sources:

• https://www.globaltrademag.com/how-has-the-role-of-forklift-trucks-evolved-in-warehousing-operations-landscape-amid-flourishing-e-commerce-presence-worldwide/
• https://thebossmagazine.com/reducing-the-risks-of-warehouse-forklift-accidents/
• https://www.forkliftinventory.com/blog/how-to-buy-a-forklift/
• https://www.entrepreneur.com/encyclopedia/capital-equipment
• https://www.irs.gov/newsroom/irs-issues-guidance-on-section-179-expenses-and-section-168g-depreciation-under-tax-cuts-and-jobs-act
• https://www.constructionexec.com/article/keep-up-with-the-demands-of-construction-business-seasonality
• https://industrytoday.com/forklift-hire/
• https://www.irs.gov/faqs/small-business-self-employed-other-business/income-expenses/income-expenses-7