The Pros and Cons of Material Handling Equipment Leasing

The Pros and Cons of Material Handling Equipment Leasing

If you are considering investing in a forklift for a warehouse, or other large piece of material handling equipment, you will quickly find that those machines are very expensive. This is where material handling equipment leasing comes in, however. If you need a piece of equipment for longer than a few days, renting it would not be cost effective. However, purchasing it requires a huge investment and that is something that not everybody has available to them. That said, there are other options available as well, such as financing or even taking out a loan. So what are the pros and cons of leasing in particular?

The Pros and Cons of Material Handling Equipment Leasing

The biggest advantage of leasing your equipment is that it means you don’t have to spend a huge amount in one go. As such, it is a lot cheaper in the immediate, even if it is more expensive in the long run. This, in turn, is one of its main disadvantages. What is the most important benefit for many companies, however, is that it enables them to get access to the equipment they need immediately.

There are also ways to keep prices of a lease down even more. For instance, you could decide to lease a secondhand piece of equipment. Large material handling equipment is usually built to last a lifetime and since it is not high tech equipment, it won’t become obsolete either. In fact, a machine that is nearly a decade old can work just as well as a brand new one, so long as it has been properly maintained and serviced.

Of course, you may not want to lease either. The reality is that, for the duration of your lease, you will not own the machine. While this can be beneficial because it means you are also not responsible for issues such as maintenance, servicing, repairs, and perhaps even insurance, it also means that you don’t have any new assets in your business. Furthermore, at the end of the lease period, the equipment still isn’t yours, unless you make the balloon payment. That said, most lease companies also allow you to return the equipment at the end of the lease and swap it for a newer model, simply starting a new lease. Again, therefore, there are pros and cons to each of the options.

A final thing to take into consideration is that leasing is not the same as renting. Renting is for a short period of time and it means the machine will never be yours, no matter how long you rent it for. Leasing is a type of purchase agreement, by contrast. This means that the ultimate goal is for you to own it at the end of a certain period. It is also not the same as a loan, as this means that the machine is yours from the word go but that it is used as a collateral instead.

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