What is Forklift Truck Finance?
Forklift trucks are essential to many businesses, but they don’t come cheaply. Commercial truck financing helps you acquire forklifts new, used or at auction, without paying a large amount of cash upfront. You’ll find plenty of lease options from general and specialist lenders, as well as forklift manufacturers and suppliers.
How Does Forklift Truck Finance Work?
Here’s a quick overview:
Term and Repayment:
Forklift truck finance is designed to ease pressure on your business’s cash flow by spreading the cost. Whether you opt for hire purchase or a lease, you’ll make monthly repayments over a period of up to five years. These payments are not affected by inflation or interest rises. You can sometimes choose to pay off the remainder early, but there will usually be a penalty.
Lender Requirements:
When you apply for financing, the lender will carry out standard credit and security checks. You’ll also have to show evidence of your business’s finances over a set period. This might include a cash flow forecast and balance sheet, as well as accounts, income statements and client agreements.
I need a forklift for my business. What are my options?
There are three major options for acquiring your new forklift truck.
Hire Purchase:
With Hire Purchase, the lender buys the forklift on your behalf and you pay back the cost over time, plus interest. Once you’ve made all your monthly repayments, the item is yours in return for a nominal fee.
Operating Lease:
Operating Leases are the most affordable option. Repayments are calculated based on the forklift’s residual value, and the lender sells it at the end of the lease to recoup the remaining cost. At this point, you can end the lease arrangement, rent a replacement forklift, or upgrade to a different model.
Finance Lease:
With a Finance Lease, the lender also buys the forklift and you pay for the right to keep and use it as long as the agreement lasts. Once the lease term ends, you can either renew the lease, sell the forklift (you’ll keep a percentage of the proceeds), or end the lease and return the forklift.
If you already have cash tied up in high-value equipment, including forklifts, you may be able to release some equity by refinancing. This means selling the item to a lender and then leasing it back.
What are the pros and cons of forklift truck finance?
Like any loan or lease, forklift finance always includes interest. This means that you pay more overall, but in small, manageable instalments over time. Depending on the agreement, you’ll also be able to upgrade to a new forklift without waiting to sell the existing model.
The main thing to bear in mind is that the lender keeps ownership of the forklift for the period of the lease. You may have to comply with strict maintenance requirements, even if you stop using the item. And you won’t build up any equity, as you would if you owned it outright.
Forklift Truck Finance
Spread the cost of new or used forklift trucks with flexible finance tailored to your business.
Protect working capital while securing the equipment you need to keep operations running efficiently.