When to Lease Vs Buy an Electric Forklift – 3 Questions to Ask
One of the many decisions you’ll make when investing in a new piece of equipment is whether to buy or lease. A big part of that decision is the forklift’s battery and what it will eventually cost to replace it.
A forklift battery should last a single-shift operation for five to eight years. Proper care and maintenance can extend battery life up to ten years, but they don’t last forever. The average cost to replace an industrial battery is about $6,000 (give or take $1,000). Contact your rep for a more precise quote.
If you’re unsure whether to lease or buy an electric lift truck outright, consider:
– How many hours will the forklift will be used each year?
– What is the operation’s current / future cash flow?
– Can the forklift be well-maintained by staff?
How many hours will the forklift be used each year?
Forklift age is measured in hours. For a single-shift operation with an 8-hour work day, the average forklift runs 2,000 hours/ year. Operations with a below-average use (1300 hours or less per year) are likely to save money by buying an electric forklift rather than leasing.
What is the operation’s current and projected future cash flow?
Businesses with tight cash flow or uncertain future cash flow are better off leasing. Lease payments are generally lower than finance contracts, so a business can have more cash on hand to invest in inventory, product development, etc. Also, lease payments can usually be deducted on a tax return as a business expense.
Can the forklift be well-maintained by staff?
If you have an on-site forklift technician, great. A well-maintained forklift is more likely to have a higher trade-in value. Those without dedicated maintenance staff may be better off with a lease where maintenance can be included and the equipment can be returned for a newer model at the end of the lease term.
A Few Things to Know About Forklift Lease Contracts…
Forklift leases can be adjusted based on the number of hours accumulated (1500, 2000, 2500). The lower the hours, the lower the payment; however, the cost for overtime hours can be substantial. Make sure you understand the fees before signing a contract and make your best guess on usage.
Finance contracts can provide flexible payment terms, including contracts from 12-72 months and can be set up with a seasonal payment structure to help cash flow during the slower seasons. This is referred to as a “Flex Lease.” Split terms are also available which provide an optional lease extension. As an example, a 36-month lease with a 24-month extension provides an option to return the equipment at the 36th month or 60th month. Payments are generally lower in the second part of this contract.
For more information on buying a new or used electric forklift, please don’t hesitate to contact us. Our friendly and professional staff are committed to helping you find the right equipment with the best terms.