User-Guide to 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 Toyota 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.

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.

1. 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.

2. 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 Toyota Commercial Finance, can sometimes raise the residual value if maintenance is included.

3. How much money do I need up front?

There is generally little or no money due at signing.

4. 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.

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. Toyota 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 Toyota’s flexible lease programs, you can download our ebook on the contact your locally authorized Toyota dealer for more information.