Should I Rent, Lease, or Buy a Forklift?
Almost everything is moved by a forklift, stored on a rack or tracked by a bar code. Whether it’s moving food, medical supplies or teddy bears, today’s market demands efficiency, expediency and accuracy. Forklifts are an essential part of tackling day-to-day inventory operations for most businesses. They get goods from point A to point B quickly, and forklifts make shipping, stocking, and loading products easier and much more efficient. And efficient, effective material handling is the name of the game. Like cars, the technology in new forklifts is evolving to include more complex elements that are trending with the rapid growth of the material handling industry. Things like energy savings, automated guided vehicles, telematics, lithium battery technology, and ergonomics are now common on many new forklifts.
Small companies and large companies may be weighing some of the same options when it comes to ownership. Each will have unique needs when the time comes to balance sheets, ownership, and productivity. Renting entails less commitment but may be more expensive in the long run, whereas leasing and owning come with their own pros and cons.
This guide will serve as your reference when considering the different options when it comes to choosing a method of outfitting your facility.
Renting a Forklift
Renting a forklift is often the perfect solution for many companies who either need to supplement their fleet temporarily or for companies who don’t usually need a forklift. Renting and leasing a forklift are very similar options. However, renting can be a great option to try out different equipment options to see what best suits your needs. Don’t like that a particular forklift is too slow? Trade it in for a faster rental. Want a heavier load capacity? Same thing. Leasing and owning options will be much harder to replace if you are unsatisfied with anything about it.
Renting is a fantastic way to get a feel for a machine to make sure it is the right fit for your operation. If you have a fleet of older model forklifts, rent a newer model to see if the cost will be worth upgrading to. You may also want to consider renting during your peak periods where you have high volumes of inventory coming and going. Bulking up your fleet with a rental during the Christmas season or any other high-volume season could be the perfect solution to some of the friction occurring in your warehouse. Also, there are no additional maintenance fees when it comes to renting as all maintenance costs are included.
One of the key differences between renting and leasing is that you will most likely not be able to buy it. However, this is usually fine as you can always decide to purchase the same model, new or used.
Pros of Renting:
- Good way to try different models and equipment to see what works best for your operation.
- Save money with no commitment to buy.
Cons of Renting:
- Renting may be more expensive in the long run.
- Responsible for overusing or damaging the equipment.
Leasing a Forklift
When it comes to leasing, you will need to compare it with the monthly rental cost. The cost of leasing will depend on the overall cost of the forklift. With a $25,000 forklift, you may be looking at monthly payments in the area of $600. If the truck costs twice that at $50k, your monthly lease will be about double as well. You also need to factor in other costs when it comes to maintenance and extra batteries or gas. Don’t forget the lease rate can play a huge role in your final monthly payment. Shop around for the best rate and consider the tax implications by financing the equipment as a capital lease.
Leasing also makes it possible for you to set the terms of when you would like to be done with the equipment. For example, if you know that you are going to revamp your warehouse entirely in two years, this is the perfect timeline to set for end of lease.
Pros of Leasing:
- Can be a lower cost option than buying outright. Having the chance to pay things off overtime may be the best option for your balance sheet. The lower monthly payments can give companies the needed time to boost revenue.
- You will have a semi-permanent addition to your fleet that boosts the production capacity of your warehouse.
- You can spread out the cost without tying up too much cash in a forklift purchase. Leasing is a great option for getting some new technology without overcommitting.
- Leasing provides some unique tax advantages. Most states in the U.S. offer leasing as a 100% tax-deductible expense.
Cons of Leasing:
- The long-term cost will be higher than buying outright. Because you spread out the cost of the lift truck over time, you will pay a little extra.
- A leased Forklift is not an asset on the balance sheet. You don’t own it, so you can’t sell it.
Buying a Forklift
Buying a forklift is a great option and the cheapest in the long run of all the options of leasing or renting to own. If you know exactly what kind of equipment you are looking for, have a clear picture of where your company growth is headed and are in a position to make a capital equipment investment, you are one step ahead. Choosing to buy a forklift also means deciding whether to buy new or used.
Regardless of new or used, keep in mind your lift truck purchase must be able to keep up with your demands of hourly use per day. You’ll need to carefully consider who and how you’ll handle maintenance. Options include Comprehensive Service Agreements, As Needed Service from a professional forklift repair company or in-house equipment repair.
Finally, consider the tax implications. It may be a great year to invest capital dollars in new material handling equipment because of the Tax Cuts and Jobs Act, signed Dec. 22, 2017. This law made significant changes to the guidelines for depreciation deductions. See Section 179 of the tax code for more information.
Pros of buying:
- The forklift equipment is an asset on your balance sheet with the ability to sell it at any time.
- You can leverage the purchase with things like extended warranties and maintenance.
- Consider potential tax advantages and investments
- Run the forklift as much or as little as you need without worrying about the leasing or renting company.
Cons of buying:
- Ability to purchase depends on cash on hand. Consider economic climate carefully.
- Preventative maintenance and repair costs are your responsibility.
- If your warehouse slows down for periods of time, you aren’t able to cease renting and give it back to the owning company.
Qualified Personnel for Warehouse Operations
With any of these options, you will need qualified and trained personnel to operate your material handling equipment in compliance with OSHA mandates. This includes initial operator certifications and re-certifications after 3 years.
Not only will certified employees meet OSHA regulations for forklift safety training and handling, but companies can drastically improve their operations and operational capacity. Forklift operators are properly trained to prevent damage not only to the equipment, but also the goods they move.
Forklift operator training is just one component of training your employees to efficiently and safely work in warehouses every day. Training programs from Andersen Material Handling can provide your company better safety compliance, more efficient work skills, and well-trained forklift maintenance technicians.
We provide forklift operator and safety training programs in Michigan, Ohio, Florida, The Caribbean, and Latin America. Improve your material handling operations today with better-trained staff.
Companies, both large and small, take advantage of the different ways to supplement their warehouse equipment — even Fortune 500s lease or rent forklifts to best suit their needs. Your company will have unique needs when it comes to balance sheets, ownership, and productivity.
Having a new machine in your warehouse will mean enhancing your day-to-day capabilities. The above routes are all viable ways to get there, and there is no perfect answer. Renting equipment is perfect for fixing temporary demand issues without commitment. Leasing is perfect for longer-term operations with lower monthly payments than buying (and no down payments). And buying is the best option for providing the most use at the lowest lifetime cost.
Whatever option you choose, Andersen Material Handling can accommodate your business. No one is more knowledgeable about warehouse operations while providing the highest level of service and dedication to our customers. Contact us today and tell us about your situation. We can help you choose the best option for your needs.