A Complete Guide to Forklift Renting and Buying
Deciding whether to rent or buy materials handling equipment can save or cost you a lot of money, and will be different for every business.
When looking at purchasing large and expensive warehouse equipment such as a forklift, you need to consider whether owning it will have greater long-term benefits than simply hiring it from a third-party provider.
In this guide we look at the advantages of renting rather than buying warehouse equipment, as well as some scenarios where purchasing outright can make more sense. We also provide recommendations on what to look for in supplier and important questions you should cover with your supplier before choosing either option.
A world of choice
Equipment hire firms today have a lot more to offer than they used to. Rather than only providing dry hire equipment, they offer a comprehensive range of services included in the rental package. This is part of the reason more businesses are choosing to rent these days.
Why do many businesses choose to rent?
Businesses with seasonal busy periods often prefer to hire their equipment rather than buy, as they can be busy for one portion of the year and then have little or no need for a forklift in their quiet months. These can include agribusinesses, businesses which focus on special holidays such as Christmas, Easter or Valentines Day or any business whose production peaks at a certain time.
Other businesses that may rent rather than buy include small businesses and startups. They often do not have the capital to purchase large items such as forklifts, even if they need them. These businesses often hire their equipment from a rental company.
Businesses who are considering a new type of warehouse equipment also hire, as this is a cost-effective way of seeing if it suits their purposes before purchasing. Renting can also help businesses with broken equipment out of a tight spot, while they wait for their own equipment to be repaired.
And it’s not only SMEs that prefer hiring to buying. Many large organisations are renting. They crunched the numbers and realised hiring was more advantageous in the long term.
Advantages of renting
So what are the advantages of renting rather than buying your materials handling equipment? There are several including the following:
- No large upfront capital outlay – you are not purchasing the equipment, so you don’t need to dip into your precious operating capital. You only need to pay a small monthly hire charge instead.
- Tax advantages – renting is a tax-deductible operational expense, where you receive an immediate financial benefit without the need for the complex depreciation calculations and asset valuations involved with plant and equipment purchases.
- Technology upgrades – renting allows for the regular upgrade of equipment to the latest models at no additional charge, allowing a business to stay abreast of current technology and steadily improve its overall productivity.
- Maintenance included – the cost of maintenance is normally included in the rental price, so with servicing taken care of, a business can budget ahead knowing exactly how much it will cost each month.
- Guaranteed reliability – a good hire firm will guarantee the reliability of its equipment by providing free on-site repair or replacement if your equipment breaks down, keeping downtime to an absolute minimum.
- Improved workplace safety – because your hire equipment is regularly upgraded and properly maintained, your business will always meet its OHS compliance requirements and will likely have a lower accident record as a result.
So with such an impressive list of advantages, it’s easy to see why renting materials handling equipment is an attractive proposition for many businesses. But purchasing warehouse equipment can also make sense.
The long haul
Materials handling equipment such as a modern forklift is an expensive piece of machinery. Part of the reason for this is that today’s models feature a wide range of state-of-the-art technology and are designed to withstand punishing use in a variety of indoor and outdoor conditions.
So despite the cost, buying such a machine outright is viewed by many businesses as an investment in years of highly-productive and trouble-free service to come.
Businesses who prefer to buy rather than rent can include those with a policy of owning their own capital equipment. It can also include those with the finances to do so, such as a competitive line of credit or the spare cash to take advantage of a good deal.
Large companies with many branches also often prefer to buy rather than hire, as significant savings can be made when purchasing a fleet rather than a single unit.
Advantages of buying
A return-on-investment analysis will show that buying new can be a good decision for a business, particularly over the long haul, as advantages that come with buying over renting can include:
- Less overall cost – over time, your outlay will be less than with renting, where you are paying a premium per month for the security of built-in maintenance and support.
- Unlimited use – you can use your own forklift as and when you see fit, while some equipment rental companies charge penalty rates for equipment usage over and above their specified allowable hours per month.
- Valuable assets – owning your own plant and equipment gives your company assets against which you can borrow to further expand your business in the future.
- Taxation benefits – a business can depreciate its assets over time, which will provide more income on your profit and loss statement and increase your assets on the balance sheet.
Drawbacks to renting and buying
The choice of whether to rent or buy your equipment hinges to a large extent on who you plan to rent or buy from. Renting only has the advantages it does if your chosen rental company provides the additional services that make renting a good choice.
It’s fair to assume that operations managers and logistic teams expect a reliable forklift to seamlessly integrate with their workflow so if your forklift rental doesn’t come with a comprehensive preventative maintenance plan or doesn’t help achieve the desired task, you could face additional costs not to mention, lost time.
The main risks of buying a forklift outright are ending up with a machine that isn’t cost effective and ends being more effort to manage than it was to buy. This is a common scenario for business owners who panic to buy a new machine and find themselves in a whole new realm of problems.
When renting through an equipment hire company, it’s very important to clarify the details before signing the contract. Potential pitfalls if you don’t could include;
- Inferior equipment – forklifts that have been misused or are not the latest model can lead to frequent breakdowns and lost productivity.
- Poor maintenance – irregular or sub-standard servicing can also lead to equipment breakdown.
- Poor workmanship – inferior servicing carried out by inexperienced or unqualified technicians can damage machinery.
- Poor service – if you have a problem and your provider doesn’t show up when you need them, the outcome will be lost productivity.
For these reasons, it always pays to take the time to investigate a rental company’s reputation, capabilities and references before entering into an agreement with them. And if they are found to be lacking, shop around for a better provider.
Given the large financial outlay, it is even more important to vet a supplier before purchasing warehouse equipment from them. If not, potential pitfalls could include;
- Purchasing a lemon – if you buy through an auction, you could end up with an unknown inferior brand imported for a quick profit.
- Not buying the latest technology – buying equipment featuring old technology will add to your whole of life costs.
- Buying second hand – being talked into buying a second hand unit could see you inherit someone else’s problems.
- Paying too much – entering into the wrong forklift finance agreement could see you paying too much for your equipment.
Whether you’re renting or buying, it’s important to choose a supplier with a comprehensive range, competitive pricing, a sound reputation and the backup service and support that you need.
And in the case of warehouse equipment, the one name that stands out in Australia is Lencrow Forklifts, the company with more than 40 years experience in materials handling dry hire, wet hire and new and used sales.
How to pick the right rental provider
Choosing a provider with a solid reputation who offers a range of quality equipment at genuine prices and with a strong service promise should be your primary priority.
Depending on your location and needs, you will want to check if your provider offers customer service and technical support in your local area. Generally, most providers have branches in Sydney, Melbourne, Brisbane, Adelaide with a growing number of regional bases popping up across Australia.
Important things to look out for when choosing your provider
There is no doubt you will be flooded with choice when shopping around. Important benefits to look out for include;
- Flexible hire options – your hire period could be subject to change so it helps if your chosen provider has your covered whether you need it for one day or 3 months.
- Wet & dry hire solutions – this can come in handy if you require an experienced operator at a per hour rate.
- Long-term hire – good providers can assess a workplace, make recommendations on the best equipment for your operational needs and provide long-term contractual arrangements from 6 months up to 5 years.
- Maintenance included – all servicing, maintenance and repairs should be included in the price of your rental forklift during the period of hire.
- Fleet management – ask if your provider offers fleet management services for set terms and prices for 3, 5 or 7 years. This could help your business gain new operational efficiencies, as comprehensive fleet management agreement includes management of maintenance and the option to add extra units for the same price if required to meet unexpected demands.
- 24/7 breakdown service – if your rental forklift breaks down and needs repairs or replacement, an ideal provider should be able to be onsite within 2 – 3 hours (subject to location).
- Purchase rebate – a great bonus if you decide to purchase your rental forklift.
- Quality brands & high capacity – whether you need a walk-behind pallet stacker or a 45 tonne rough-terrain forklift, you want to be sure your provider offers both quality and quantity.
How to choose the right place to buy your forklift
Buying your materials handling equipment from a provider should give you the confidence that you have made a wise business decision. Reading customer reviews and researching quality products is a good way to shortlist a group of providers.
Beyond the scope of the advantages of buying new that were highlighted earlier in this guide, it is likely that your provider will have something unique which peaked your interest. Keep an eye out for;
- Exclusive service offerings or warranty schemes – these are key when considering your equipment’s whole of life costs
- Superior in-house technology – some providers are opting for automated & integrated platforms designed to minimise lifetime running costs.
Ready to rent or buy
The choice between renting or buying comes down to your particular operational requirements and is a choice best made with the help of a trusted supplier such as Lencrow Forklifts.
We carry a wide range of materials handling equipment and have no brand loyalties to influence our advice. And with more than 40 years in the industry, there’s not much we don’t know about warehouse equipment.
So feel free to call us on 1300 536 276 and talk to one of our expert team about your requirements. With more than 60 staff at five branches Australia-wide, we have the resources and expertise to provide a solution to your materials handling problems … whether that turns out to be renting, or buying.