Selecting whether to buy or long term hire a forklift truck is an important decision for any enterprise. Except for staff, equipment like material handling solutions is likely to be among a business’s biggest expenses. Companies keen to reduce their running costs will discover that choosing the correct option is critical. To help firms narrow the field, in this blog, we’ll discuss the options of long-term hire and purchasing equipment outright.
Long-term hire for forklifts
Leasing, sometimes referred to as long-term hire has quickly become one of the most sought-after ways to use forklift trucks.
Long-term hire agreements have several benefits, like working flexibly, reducing costs upfront, and access to the most up-to-date equipment.
In comparison to buying a forklift, long-term hire requires a far smaller initial investment. While the cost to pay upfront is considerably lower, firms still receive the same brand-new equipment. As a result of access to all-new equipment, companies can operate more effectively than they would when using an ageing and outdated forklift. Additionally, firms are guaranteed an all-new forklift every time they renew their agreement.
When a lease approaches its end, businesses have total flexibility. If they find the forklift, invaluable and ideal for their needs, they can buy it outright. However, they can also trade it in for an updated model, or even swap it for an entirely different make and model.
Downsides of leasing
It’s worth noting that long-term hire does have some drawbacks. An obvious downside is that when leasing, a firm doesn’t own the forklift as an asset. They are simply paying a significant fee for its use. Many leasing companies may also impose set usage limits for their equipment, similarly to mileage restrictions enforced when a vehicle is leased. If a firm exceeds the forklift hours allowed by its leasing agreement, it may incur substantial costs.
When a business leases a forklift, they must put their trust in the hiring company to provide proper and efficient servicing and repairs when required. If the leasing agent is slow to affect repairs or carry out maintenance, companies can suffer expensive downtime.
Purchasing a forklift
Buying a fork truck outright presents some significant advantages for firms. Enterprises with an abundance of capital to hand or access to equitable lines of credit can find that buying a forklift makes more sense than leasing. When forklifts are bought outright, companies can add them as an asset to their books. They can borrow against the equipment for further purchases and also sell it if necessary, to finance other equipment.
Over a forklift’s lifespan, buying one outright is the lowest cost option. Second-hand forklift purchases can also reduce investment costs further.
Downsides of purchasing
Buying a forklift outright can have some negatives. Forklift purchase involves the highest initial outlay. Purchasing a lift truck also negates the flexibility offered by leasing. Additionally, firms will need to arrange and pay for their servicing and repair plans.
It is understood that choosing between leasing or owning a fork truck is an individual decision, and the right answer will be impacted by the unique needs of an enterprise. While there are advantages to owning an asset, many firms find that they prefer the ease-of hire, maintenance cover and flexibility of a long-term hire contract.
Finally, when deciding on the best option for their warehouse, companies should remember that forklifts are a long-term investment when bought. As a result, firms must consider their current needs, and how they anticipate they will change over the next two decades.
Always choose the forklift arrangement that will deliver maximum value for your firm and suit your long and short-term needs.
To find out more about what would suit your business, speak to our friendly team today.