When you go out looking for a forklift, you will be presented with three options: buy, lease or rent. The first option is simply taken out of the equation as soon as you realize the cost of a single forklift. This actually leaves us with two options. You can now either rent or lease the forklift for your business.
The lease is quite similar to renting with the only difference being that it takes into account the overall working season of your business. While rentals are usually short term, with a lease you have the option of taking custody of the forklift for a longer period of time.
When to lease the forklift?
Since you might get confused between renting and leasing, we have drafted some checkpoints that you can compare your business again to see when you are actually ready to upscale from rental to forklift leasing.
- You have a predictable yet a high usage of a forklift with the equipment covering over 1500 hours per year on the record.
- The repair and service requirements are high and it doesn’t make much sense to incur the added cost of paying the rental company for any damage that is caused
- You have a constraint on the budget and with the limitedcapital, you cannot actually buy a forklift. Without having to pay any down payment, your business will get to own the equipment. More so, you won’t even have to pay for its monthly lease from the capital reserves you have kept aside for your business. Depending on the contract you end up signing, the lease payment can be made from the normal operating budget you have allocated for your business.
- You want to keep the transactions off the balance sheets
If your business, tends to meet these requirements then it is better that you go for leasing instead of rental services. If you’re still confused, read more here.
Downside of leasing
There is nothing in this world that is picture perfect and doesn’t come with a downside that is worth considering. Same is the case with the forklifts. Like every lease agreement, you will have to pay a certain interest in each payment that you make. This means that over a period of time, it actually would become the more expensive option than the rental would.
Secondly, you would have to pay for the time it is in your custody even when it is not being used. It can be a problem if your business is going through a crunch time and you have already agreed to the lease term.
This is not the case with rental. You only pay for the time that it is being used for and then end up returning it to the company till you need it again. For this to work, however, you would have to ensure that the overall usage is low enough to cover the cost breakdown that this rental would ensure. It is only then that the rental will become a more feasible option.
Renting and leasing might be similar but with these factors in consideration, you have a lot to consider here before you make the choice.