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Forklift Truck Contract Hire or Hire Purchase?
As with any major purchase of equipment or machine you have a range of options in how to finance the purchase or hire, here we take a look at contract hire, hire purchase and finance lease and which maybe more suitable for your company's fork lift trucks.
Forklift Contract Hire is perhaps the easiest method of purchase. Basically a formal rent of the forktruck where you are given a truck for a set period of time and an allocation of work hours in return for a financial sum usually paid every month. This option may initially look more expensive than other options and at the end of the contract hire period you do not own anything and have to give the forklift back. The price however will usually include all services and maintenance costs. The only extra you will need is for the fuel, the rest should be handled by the forklift hire company. The cost is also a complete expense and hence maybe beneficial to your tax bill at the end of the year, speak to your accountant to see how this would benefit you the most.
Forktruck Hire Purchase differs to contract hire in that at the end of the period you will own the truck itself. The hire portion of the truck should still be tax efficient (again speak to your accountant) and you will have a fixed contract of payments ensuring you know exactly what is to be paid when. Often a balloon payment is required at the end of the contract and you can also find Hire Purchase which allow you to hand back the truck instead of settling the final payment. There may also be differences in the level of service that comes with the hire purchase, it maybe you who is responsible for certain aspects of the maintenance and services so ensure you get the full picture and accurate budget for the use of your fork truck throughout the agreed term.
The length of time you will require a forklift hire for may affect which option is most suited to your business. The costing mechanism itself may also be an important factor, if you prefer to have a price set in stone each month for the running of your truck then contract hire is probably more suitable as you will never be hit with an unexpected charge or fee, however the money you are paying is in effect "dead" and if you are looking at a long term commitment the advantages of fork truck hire purchase may be for you.