What is the Cost To Lease a Forklift vs. the Cost to Buy a Forklift?
When you're looking to get a new forklift for your business, whether it's a single lift or a full fleet, one question inevitably pops up: Should I buy or lease?
The right answer depends largely on the needs of your business. The right choice improves both your efficiency and your bottom line, while the wrong one has the potential to burden you with unnecessary costs.
What Is the Difference Between Buying and Leasing?
The difference between buying and leasing is mainly who owns the product. When you buy a forklift, you are the owner and all responsibility for the lift is yours. When you lease a forklift, you are paying the owner a monthly fee to use the lift. Many leasing agreements come with provisions that state the owner of the lift is responsible for repair and service costs.
Some people think that purchasing a forklift is automatically the better choice, feeling that it is always better to own. But that isn't always the case, and the best option varies from business to business. There are more factors to consider than just ownership.
Pros and Cons of Leasing
Equipment leasing, like every business decision, has pros and cons.
One of the biggest advantages to leasing over buying are the upfront cost savings. Rather than paying the full price for a vehicle, you pay a low initial sum and then monthly installments. And most states count lease payments as tax-deductible operational expenses, which often make leasing a more cost-effective choice. Maintenance expenses tend to be lower, as many lease agreements include a portion of your monthly payment as maintenance fees, which covers repairs and servicing.
Leasing a forklift also gives you access to current technology without having to pay new model prices. This lets you test out new lifts without having to commit to an outright purchase. Many agreements also allow for equipment replacement at regular intervals, ensuring the safety and efficiency of your staff and tools.
While upfront costs of leasing are less than if you buy, over time your monthly payments add up to more than the actual cost of the forklift. And there are often penalties for overuse. Most leases have a set amount of allowed hours of usage; exceeding this allotment typically carries a penalty. However, some dealers waive this fee if you continue leasing from them.
Another disadvantage is that leasing usually covers maintenance, but that doesn't mean you're getting the best maintenance or that it's performed on your schedule. It is always best to clarify the details of a maintenance agreement and look into the reputation of the supplier. Poor maintenance causes issues down the line and leads to downtime that could have been avoided.
Pros and Cons of Buying
As with leasing, outright purchasing a forklift has its own set of pros and cons.
First, buying a forklift offers a better return on investment than leasing since it allows you to sell the lift later. Buying also takes some of the pressure off of cosmetic damage. Obviously you want to keep your forklift in tip-top shape, but sometimes scratches or dents are inevitable. With a purchase, that surface damage doesn't matter as much, whereas many leasing agreements have provisions that state the vehicle must maintain a level of appearance or extra fees are charged.
Buying a forklift also gives you a higher degree of customization. When you lease, you typically choose from stock vehicles. But when you buy outright, you get to pick and choose what goes into the vehicle, customizing it for your specific needs.
Overall, buying a forklift is always cheaper than purchasing one, but that upfront charge is expensive and can eat into your available capital. For businesses with little in the way of funds, a large purchase has a major effect on operations. Purchasing prevents you from taking advantage of newer models, as well, since the only way to get new technology is the often difficult process of selling your current lift to buy a new one.
How Much Does it Cost to Lease or Buy a Forklift?
Pricing varies based on a number of factors, including size, capacity, model, and location. What follows are general pricing guides to provide an idea of what you can expect to pay when leasing or buying a forklift.
Leasing a Forklift
The cost of your lease is determined by factors such as the age of the forklift (new costs more than used), the condition of the forklift, and the base price of the vehicle.
- A $10,000 forklift leases for around $200 - $300 per month.
- A $25,000 forklift leases for around $500 - $700 per month.
- A $50,000 forklift leases for around $800 - $1,200 per month.
Many leasing agreements have additional fees to cover maintenance and servicing, but those costs vary and are primarily dictated by the dealer.
Buying a Forklift
The cost to buy a forklift depends on a variety of factors, including weight capacity, power-type, added features, and the dealer you choose.
- An electric forklift with a 5,000-pound weight capacity has an average cost between $18,000 and $25,000.
- The average cost of a battery and charger is around $4,000 - $6,000.
- An internal combustion forklift with a 5,000-pound weight capacity has an average cost between $15,000 and $28,000.
- A large internal combustion forklift with a 10,000-pound weight capacity has an average cost between $28,000 and $50,000.
Whether to Buy or Lease
Whether it is better to buy or to lease depends on your business and its needs. If you use forklifts daily or for more than 1,500 hours per year, leasing may be the better way to go. You don't have to drop a large payment for a vehicle and you get current technology without paying new technology prices. If you are confident that your forklift usage won't decrease, leasing is the best way to go.
However, if you have the capital to invest in an outright purchase, then you are probably better off buying it. Especially if you do not use your lift frequently; infrequent usage means less maintenance and repairs, allowing you to operate the vehicle for longer. Buying gives you access to the equipment you need at any time, with no monthly fees.