The upfront cost of a new forklift truck can be a significant expenditure, especially for small to medium-sized businesses. These costs can range widely depending on the specific model, features, and capabilities of the forklift.
While investing in such equipment can certainly boost operational efficiency and productivity, the initial outlay can put a strain on a company’s cash flow.
In fact, the financial burden can be so substantial that 60% of UK small and medium-sized businesses resort to asset finance to fund these types of investments.
By spreading the cost over time, financing options provide a more manageable way to acquire essential assets without compromising financial stability.
Advantages of Finance
Cash Flow Management: Financing a forklift allows businesses to spread out the cost over time, making it more manageable and less of an immediate burden on cash flow. This helps maintain financial flexibility and free up funds for other operational needs.
Included Maintenance: Financing contracts often include maintenance and servicing, ensuring the equipment remains in optimal condition without incurring unexpected costs.
Access to Latest Models: Financing options typically allow businesses to upgrade their equipment regularly, ensuring they have access to the latest technology and models.
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The Most Common Financing Options
When purchasing a forklift truck, businesses typically have several financing options to consider:
- Leasing: This is a popular option where businesses make regular payments for the use of the forklift over a specified lease term. At the end of the term, the business can choose to return the equipment, extend the lease, or purchase the equipment. There are two main types of leases: operating leases and capital leases.
- Loans: A business could take out a loan to cover the cost of the forklift. The business will then repay the loan amount plus interest over a set period of time. Once the loan is fully repaid, the business owns the forklift outright.
- Hire Purchase: In this arrangement, the business makes a small initial payment, followed by fixed monthly instalments. At the end of the payment period, the business becomes the owner of the forklift.
- Asset Finance: Some businesses may opt to use their existing assets as collateral to secure financing for new equipment. This can be a good option for businesses with valuable assets but limited cash flow.
Each of these options has its own advantages and considerations, so it’s important for businesses to carefully evaluate their needs and financial situation before making a decision.
Do Forklift Dealerships Offer Financing?
Forklift dealerships often provide financing options for their customers. They typically have partnerships with financial institutions or in-house financing departments to assist with the purchase of new or used equipment.
These financing services can be quite flexible, offering lease agreements, hire purchase, and loan options to cater to different business needs and budgets. Some dealerships will even offer trade-in programs, where businesses can exchange their old forklifts for credit towards the purchase of new ones.
Additionally, forklift dealerships often provide comprehensive maintenance and service packages as part of their financing deals, which can be advantageous for businesses looking to minimise unexpected operational costs.
However, it’s always a good idea for businesses to compare the financing options offered by the dealership with those of independent financial institutions to ensure they’re getting the best deal possible.
Your Budget & Forklift Purchasing Options
When it comes to purchasing a forklift, understanding your budget and exploring your purchasing options is critical. This section of our guide will delve into how to assess your budget effectively and explain your different forklift purchasing options.
Assessing Your Budget
Before diving into the world of forklifts, it’s crucial to have a definitive understanding of your budget. Here are some key points to consider:
- Initial Purchase Price: Depending on whether they’re new or used, their make and model, location, and any included extras, forklift prices can vary significantly.
- Maintenance Costs: The ongoing costs of maintaining your forklift should also be factored into your budget. Remember, used forklifts may require more frequent upkeep, which can add up over time.
- Lifespan: Consider the lifespan of the forklift. While new forklifts might carry a hefty price tag upfront, they often last longer, potentially offering better value in the long run.
- Depreciation: It’s essential to remember that new forklifts depreciate faster than used ones. If you intend to sell the forklift down the line, this could impact its resale value.
Forklift Purchasing Options
When it comes to purchasing a forklift, there are two main options to choose from and armed with the knowledge from this guide one will stand out for you and your business.
- Outright Purchase: If your budget allows, outright purchase can be a viable option. You’ll own the equipment outright and eliminate concerns about ongoing payments. However, this requires a substantial upfront investment.
- Financing: Financing offers an alternative to manage the cost of the forklift over time, making it more palatable, especially for smaller businesses. Financing covers several options including: Leasing, loans, hire purchase and asset financing.