Forklifts | Lease or Purchase
Liftway Limited has been leasing and selling new and used forklifts to their clients for more than 40 years. We thought that we should explain the major benefits of leasing versus purchasing of your new or used Forklift.
What are the Benefits to Leasing Your New or Used Forklift?
- Smaller outlay of cash (you keep your cash)
- Manageable Monthly payments
- You can purchase bigger and better equipped forklift
- You can have all the maintenance included in a single monthly payment
- Upgrade your equipment with no penalties (some conditions may apply)
Here are some things to consider when Leasing Your New or Used Forklift:
- Cash flow (would you like to keep your cash on-hand)
- Size of vehicle (does purchasing restrict you from getting what you really need)
- Would you like a lower buyout at end of the lease term?
- Are you using the Forklift 24 hours per day?
- and of course how is your credit rating (we can help)?
- Stretch out or early payout options!
Here are some lift truck leasing technical details:
When deciding to either lease or purchase a new or used lift truck you should consider some of the options available to you. A lease can be structured to best suit your cash flow.
With a shorter term and a smaller residual you will have your lift truck paid off quicker but with a higher monthly payment. Whereas a longer term lease with a higher residual will have a lower monthly payment but will cost a bit more due to a higher interest rate and have a larger lump sum payout at the end. Monthly payments can be extended to reduce the residual to a nominal amount.
Duty cycle, environment and maintenance play a big part on the lease term and the residual amount. Leasing over a five year term and a 20% residual if there is a high duty cycle or severe operating environment may have the forklift requiring extensive repairs before the lease term is finished and therefore not advised. This can all be calculated by our Sales Staff after a site visit.
Leasing also allows you to expense your monthly payments and any maintenance as an operating cost. If you purchase outright you are only able to write off your maintenance expenses, depreciation amount and any financing costs.
When leasing a lift truck, you are purchasing the unit and financing through a finance company where the finance company owns the unit until the last payment is received. Only at that time ownership is then transferred over to the customer. During this time frame you can upgrade your equipment to a newer model with more options with no penalties. You can also stretch your lease payments (when there is a residual owing) rather than having to pay a high residual at the end of the lease term. You can pay out the lease earlier than the term but in most cases it will cost you more to do so.
When purchasing a lift truck you have full discretion over your maintenance program, operating it in any environment and with any duty cycle.
When leasing, all these items are looked at before a lease can be structured. This will dictate the term and residual as the finance company owns this unit and will look at its expected “Fair Market Value” at the end of the lease term. A down payment may be required on the lease if the duty cycle is high and/or the operating environment is hard on the equipment.