User-Guide To Leasing A Forklift

Users-Guide to leasing a Forklift

Acquiring a forklift or a fleet of forklifts can have a major positive ROI for companies that carefully do their homework and get the best possible equipment for their operation. But choosing the right forklift is only one part of maximizing ROI for your capital equipment. You also need to consider what method of procurement to pursue: Should you rent, lease, or buy?

The answer to that questions will be dictated by your unique needs and operation. But for many companies, leasing provides too many advantages to ignore. What are those advantages? And what can you expect during the lifetime of your lease? Toyota can help answer these questions and more.

Advantages of Leasing a Forklift

There are several reasons why companies choose to lease. Here’s a rundown of some of the top reasons:

You can turn in your forklift at the end of the lease instead of hanging on to a piece of aging equipment. Trying to sell a 5-year-old forklift can be challenging, and you have more important things to worry about while running your business. With leasing, you can simply return the forklift to the lender, like forklift Industries Commercial Finance, at lease end and move on. In fact, leases with TICF are close-end leases. Let the lender sell your used forklift for you!

You get to keep your cash. Forklift lease payments are often lower than loan payments with less initial investment (often zero due at signing). And lease payments will usually have less impact on book earnings during the early years of the lease than the depreciation and interest payment associated with the purchase and/or financing of the same equipment.

You get to keep your options open. Let’s say in a few years you need a different lift capacity or your warehouse dimensions change. When you lease a forklift, all you do is turn it back in and choose a new one.
You get the latest state-of-the-art forklift model. Who wouldn’t want the latest technology and bells and whistles on a forklift?
You can simplify fleet management. Leasing eliminates the need for acquisition, disposition, and tracking.
Benefit from off balance sheet treatment. Operating lease accounting for the lessee typically allows the expense to be deducted in the income statement (as paid) but does not place the obligation (i.e. monthly payments) or the asset on the balance sheet. Your tax advisor can show you the financial impact of this benefit.
You can keep your bank lines open. Working capital lines of credit are critical to growing companies. Choosing to lease forklifts and commercial equipment allows you to use these valuable bank lines to further invest in your business.
Get payment streams that match business cycles. Many lenders offer irregular payment schedules, like quarterly payments, which can allow a business to match revenue and lease payment cycles.

What to Expect Before and After Leasing a Forklift

Developing clear expectations for your lease engagement can be complicated, especially if you’re engaged in your first lease or if you’re changing leasing companies. But by keeping track of the answers to a few FAQs can keep you on track throughout the process.

What kind of support will I get when I lease a forklift?

First, a dealer representative will assess your facility and working environment to help you choose the right equipment for the job. After selecting the equipment that best fits your needs, a financing package will be created that also matches the needs of your business. Once your forklift arrives, you will sign the finance contracts and begin using your Toyota forklift. Both your forklift dealer and your lender are available to answer any questions you have, or follow up on any issues that may come up.

Is maintenance included in a forklift lease?

Maintenance is not always included. We recommend adding a planned maintenance (PM) plan to your lease. Including maintenance in your lease limits any additional charges at lease end. Some lenders, such as our Commercial Finance, can sometimes raise the residual value if maintenance is included.

How much money do I need up front?

There is generally little or no money due at signing.

Can I buy the forklift after the lease ends?

This depends on the type of lease you’ve agreed to. There are lease options that allow you to purchase the forklift at a fair market value after your lease ends. Make sure this option is something you work out with your lender before you sign.

Choosing the Right Lease Option when Leasing a Forklift

The advantages of the leasing a forklift might be clear to you. But the fact remains that there are a great deal of lease options to consider and to sift through. Forklift Industries Commercial Finance lease options are far reaching, and your lender can take the time to walk you through each options to know which is exactly right for your operation. But there are a few things to keep in mind that can help guide you through the leasing process:

Various lease structures are available. Your monthly payment will be partially dependent on the lease structure you choose.
Your lease structure will be dependent on the amount of hours you want to operate your forklift. Over utilization can be costly, so make sure you choose the right lease structure to fit your application.
Cancelling the lease you choose can also be costly, so make sure you choose the right equipment and term to fit your needs.

If you need more information on Forklift flexible lease programs, you can download our ebook on the advantages of flexible leasing. Or contact your locally authorized dealer for more information.

How To Select The Right Forklift To Lease Option

There are a number of different options when it comes to leasing a forklift. We will wall you through the options to help you find the best option for you easily

When it comes to financing lift trucks, you have two options to choose from. Which one is best for your business? Read on to learn more.

1. OPERATING FORKLIFT LEASE

An operating forklift lease is known as a “non-ownership” lease or “off-balance sheet” financing. This type of forklift lease is structured to allow you to maximize utilization and productivity while avoiding costs associated with the forklift becoming obsolete. This type of lease contract allows the use of an asset (such as forklifts in this case), but does not shift ownership to the lessee.

A Fair Market Value Lease (FMV) is the most popular type of operating forklift lease. With this, you pay for the use of the forklifts or equipment. The benefits:

Monthly payments are generally lower than other kinds of leases because the residual value is used in calculating the payments required to finance the forklifts.

Tax Benefits – The lessee is not the owner of the asset and can therefore expense monthly lease payments as an operating expense. In many cases, the entire lease payment can be fully tax deductible.

There are a number of options for the lessee at the end of the lease term, including purchasing the equipment for its fair market value, returning the equipment to the lessor, or extending the term of the existing lease.

There is little up front expense for FMV leases in most cases, which means that the lessee will essentially start making monthly payments for the use of the lift truck equipment.

2. CAPITAL FORKLIFT LEASE.

A capital forklift lease is typically treated the same as a loan since the asset, such as the forklift, is considered owned by the lessee. Capital forklift leases are utilized for more long-term leases, which means that they are usually considered for products that have a long, useful life with low risk of obsolescence. Because ownership is shifted to the lessee, the lessee inherits the benefits and drawbacks of ownership. The asset is considered a debt of the lessee and may be depreciated over time.

With the Dollar Option Lease, the most popular type of operating forklift lease, a $1 payment at the end of the term of the lease is considered the final payment. This means the lessee has completed all obligations of the lease and officially owns the asset outright.

WHICH FORKLIFT LEASE OPTION IS BEST FOR YOUR COMPANY?

Forklift leases can be uniquely structured based on the needs of your business. Your local lift truck dealer can help guide you through the process, but here are a few options to consider:

90-Day Delayed Payment Program - Provides you with 90 days of lift truck equipment utilization free of charge before monthly payments begin. This product is ideal for budget constraints or if your business has a slow time of the year.

Early Termination Option - Designed if you’re operating on a “renewable contract” basis or if you’re anticipating application changes that may affect asset specifications. This option will allow you the flexibility to structure the lease at various terms (i.e., 3 years followed by 2 years) giving you the option to either return the equipment after 3 years, or continue leasing the equipment for the additional 2 years at a significantly reduced monthly payment.

All our branches allover south Africa leases can be done there at forklift branches around pretoria, Johannesburg, durban, Cape town, fourways, soweto, rustenburg, germiston, mamelodi, sandton, soshanguve, atteridgeville, mthatha, witbank, brits, Bloemfontein, qwaqwa, centurion, lydenburg, windhoek, Gaborone Botswana, maseru Lesotho, Manzini Swaziland, polokwane, hammanskraal, midrnad, kempton park, benoni, pretoria central address, tembisa, katlehong and many more Areas around south Africa

Fixed Purchase Option - Fixed purchase options are typically used if you are seeking an OPTION to purchase equipment at the expiration of the lease term at a predetermined purchase price. This program may qualify as an operating or capital forklift lease.

Accelerated Payment Leases - Monthly payments are higher in the first year and decrease annually over the life of the contract to better align payments to maintenance costs. If you perform your own maintenance, this is the option for you. This can be used for both operating and capital forklift leases.

Skip Payments - If your business is cyclical or seasonal, this option allows you to synchronize your payments with your cash flow. A skip program is typically limited to 3 skip payments a year. This can be used for both operating and capital forklift leases.

For more information on how leasing forklifts can be structured to fit your specific needs, please contact your local lift truck dealer.

Below is a guide on how exactly to go about hiring your next forklift.

1. What is the Maximum Weight You Need to Lift?

The first question you need to ask yourself when deciding to rent a forklift is regarding weight. You don’t want to go through all the trouble of renting a forklift only to realise it doesn’t have the ability to lift your cargo. Determine the maximum weight you would need to lift with the forklift and rent a forklift that supports that capacity.

2. What is the Maximum Height You Need to Lift to?

Next you need to figure out how high you will need to lift your cargo to. This is very easy; you just determine the height of your tallest rack. So, if you know you may need to store cargo on that 8m high rack in the corner of your warehouse, then you know your rental forklift would need to have the ability to lift to just above 8m high. Ideally, add 150mm to your top beam height to account for the pallet.

3. What is the Maximum Height You Would Need to Lift the Maximum Weight to?

This is where it may get tricky. Even though a forklift can have a capacity of 2.5 Tons and a lift height of 5m, you may not be able to lift 2.5 Tons to a height of 5m. This is where de-ration comes into play. De-ration or “de-rating” is a term used to describe the decrease in a forklift’s nominal capacity. The lifting capacity of a forklift will be affected by the lifting height; the dimensions of the load (with the load length being most important) and the use of any attachments. Contact Masslift for more information on calculating your specific application de-ration.

4. What Environment Will the Forklift be Used In?

The environment in which you will be operating the forklift dictates the type of forklift you will need to rent. For example, Diesel Forklifts aren’t a good fit for indoor applications where food is being produced due to the emitted fumes. Below are four important questions to ask about your environment:

4.1 Will you be using the forklift indoors, outdoors or both? This will assist in deciding if you require a diesel, petrol / LPG or electric forklift.

4.2 What type of surface will the forklift be used on?

4.3 What is the minimum aisle width the forklift will need to be able to right angle stack in?

4.4 Are there any height restrictions when entering or exiting the facility?

5. What Type of Cargo Will You be Lifting?

How is your cargo packaged? What type of pallets are used? Is your cargo wrapped or uniquely shaped? These questions will give your forklift rental supplier an idea about whether you may require any special forklift attachments or what length forks you need.

6. When and For How Long Will You Need to Rent a Forklift For?

Determine when (the preferred date) and for how long you would need to hire a forklift. To maximize the value of your forklift rental and reduce the monthly charge, it helps to rent for longer periods. Keep in mind that if you are a new customer that it would take up to a week to get approved for a rental contract.

7. Understand the Fine Print

Always make sure you understand the rental contract. Ask your forklift rental supplier to explain the contract to you. Ensure you understand who is responsible for the cost the insurance of the rented forklift and the transportation of the forklift to your site as examples. Other areas to confirm is what does your maintenance plan include and exclude. As an example, wear and tear items such as tyres are generally excluded from a full maintenance agreement. It is key to understand what your obligations are throughout the maintenance agreement. Making sure your drivers do daily checks is an example of a customer obligation.

8. Know the Company You are Hiring Your Forklift From

Before you go searching for forklift rental quotes you need to know how to properly vet a company. There are tons of fly-by-night middle men or small businesses that focus on renting out as many old machines as possible. And with anything in life, you generally get what you pay for. Make sure you rent a forklift from a reputable company. A few ways you can ensure this is to ask the following questions:

8.1 How long has the company been renting forklifts for and do they have any references?

8.2 What service level agreements do they have in place?

8.3 What rental footprint is available?

8.4 What is the condition and age of the forklifts in their rental fleet?

8.5 How many forklifts are available in their rental fleet?

8.6 What questions do they ask you when you enquire about renting a forklift?

Conclusion

Renting a forklift has many benefits over purchasing one. By following this guide, you will be sure to always get the best forklift for the job at the right price. If you are looking to hire a reliable forklift from a dependable and passionate company, then please contact Masslift today or get a quote online.

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