For workhouse owners who cannot afford to buy a forklift outright, leasing is a great option.
Depending on the type of forklift lease you opt for, you will continue using the machine while paying for it over time. Think of it as a hire purchase agreement that allows you to own the equipment at the end of the lease period.
Forklift leases can cost as low as $600 per month, but as high as $1,350 or more. Truth be told, the cost of leasing a forklift varies from one lease agreement to another.
If this is your preferred forklift acquisition option, you will be able to lease your preferred make and model either from the manufacturer or a third-party leading company.
In either case, the total cost of leasing the equipment will depend on the purchase value of the unit, lease period and credit rating.
This forklift buying guide will outline forklift leasing basics as well as forklift lease information.
How is Forklift Lease Cost Determined?
To help you budget more effectively for the acquisition, this guide will highlight the main aspects that will affect your lease rate.
On average, you may end up paying between $600 and $650 a month to lease a forklift priced at $25,000 over a period of five years.
This being the case, you will end up paying between $1,000 and $1,350 per month to lease a $50,000-worth forklift. So, how exactly is this pricing arrived at?
Lease Cost (per month) = Depreciation + Interest
Depreciation of the Forklift = Current Forklift Value – Residual Value (50 percent of its current value) / Monthly Payments
Interest = (Current value + Residual value) x (Interest Rate / Monthly Payments)
Assume that you are leading a forklift worth $60,000 and has a residual value of $30,000 over a period of five years. In such a case, the depreciation cost will be about $500. Assuming that the current interest rate is 7 percent, then your interest rate would be 0.07 / 60 or 0.0012.
As a result your interest rate per month will be ($60,000 + $30,000) x 0.0012, which is about $108. Cumulative, you should expect to pay about $608 a month to lease this forklift over a period of five years.
What Affects Forklift Leasing Rates?
While most of the leading manufacturers and equipment lease companies use this standard formula, the cost will also depend on several other factors.
Discussed below are some of the key cost factors that are known to influence forklift lease costs:
Forklift Lease Option
While leasing is cheaper than buying, it still will be a considerable investment. As such, it should be thought over carefully.
Basically, there are several different types of forklift leasing options, including:
Fair Market Value Forklift Lease
Also referred to as the residual lease or operating lease, a fair market lease generally will have the monthly payments.
However, if you plan to keep the equipment at the end of the lease, you must pay its fair market value. As such, it may turn out to be more expensive in the long run.
Full-Service Forklift Lease
This one works somewhat like a long-term rental in that you make a monthly payment, but the forklift provider is responsible for reliability and repairs. The monthly lease payments with this option will be relatively higher than they are with the fair market lease option.
Full Payout Forklift Lease
This option is meant for business owners who would like to own the equipment at the end of the lease period. This lease option is commonly referred to as the dollar buyout lease or capital lease owing to its nature.
Since you will only be required a small amount, often a dollar, to own the equipment at the end of the lease period, this option attracts higher monthly payments.
Regardless of the lease option you opt for, the monthly payments you will be required to make will mainly depend on the lease period.
Basically, the monthly payment is typically reduced as you lengthen the duration of the lease. Consider a longer lease if it is important to keep the payment as low as possible.
Make sure to extend it past the point where the benefits of a smaller payment are canceled out by increased costs for maintenance.
While some lease companies will not require you to pay anything upfront, some will require you to make a guarantee deposit. This is particularly the case for people with poor credit ratings.
Often referred to as the deposit, a guarantee deposit is required upfront—before you start making monthly payments. This is a non-refundable charge to lock-in the lease.
In addition to maintenance and repair costs associated with these machines, you should also consider insuring your forklift.
In this case, insurance premiums will also impact on the total cost of leasing a forklift. This could cost you an additional $5,200 per employee.
Ready to Lease a Forklift?
Would you rather pay affordable monthly installments for a forklift and end up owning it eventually? Well, consider getting a manageable lease from a trusted forklift provider like Toyota.
As you have learned throughout this guide, the cost of leasing a forklift will depend on such aspects as the unit buying price, depreciation, and your credit rating.
With this guide, you will not end up paying hidden costs in your forklift rental agreement.