Financing or leasing a used forklift

This desk is not a lender. We do not advertise a rate, and we will not invent one for this article. The finance page is arithmetic. You can type a price, a down payment, an APR, and a term and see a monthly figure. Taxes, freight, a battery, and a doc fee are not in that number. A lender prices credit, age, and hours. If you want an introduction to someone who actually lends, say so on the request. They decide.

The choice in front of a buyer is plainer than the brochures. Pay the yard. Finance the purchase so you are buying the truck over time. Or lease it so you are paying for use, with whatever end-of-term option the contract actually contains. The truck still has to be the right truck. A bad mast on a sixty-month note is a longer bad mast. Grade it first. The method is the grade. The price book is the band.

What the SBA actually says about buying and leasing

The Small Business Administration's page on buying assets and equipment is the clean public comparison. Leasing can make sense when you need equipment quickly or the equipment is expensive. The SBA lists less cash or credit up front, a short lease as a way to test equipment, maintenance that is sometimes included, and lease payments that are typically deductible. It also lists the other side: lifetime cost is normally higher than buying, replacing the asset at the end can be expensive, and depreciation of leased assets typically is not deductible.

The same page splits leases into operating and capital. An operating lease is described as closer to a rental: not added to the balance sheet in the way a purchase is, payments treated as operating expenses, lower maintenance and tax obligations on the user. A capital lease is described as closer to a loan: you own the asset for accounting purposes, it goes on the balance sheet, you claim depreciation and interest, and you take on maintenance, risk, and tax obligations. Leases sometimes have a buyout. Shorter leases usually mean higher monthly payments. Leaving early can mean a penalty. That is the SBA's language, paraphrased. Your accountant decides how a specific contract is treated. Do not take this page as a tax opinion.

Buying, in the same guide, fits when you have the cash or the credit and you expect to use the asset for a long time. The truck is your asset. A loan spreads the cost and you pay interest and fees that cash would have avoided. For a forklift you intend to run for years, ownership is often the point. You also own the repairs. A full-maintenance lease can wrap some of those repairs into the payment. Read the exclusions. Tires, abuse, and a bent mast have a way of living in the exclusions.

SBA loan programs, and where a used truck may not fit

The 7(a) loan program is SBA's primary business loan guaranty program. SBA says 7(a) loans can be used for purchasing and installation of machinery and equipment, among other uses, and that the maximum loan amount is $5 million. A forklift is machinery. That does not mean a 7(a) loan is available, fast, or priced for a single used sit-down. Lenders use their own credit rules. SBA guaranties part of the loan. It does not hand you a rate on this website.

The 504 loan program is long-term financing for major fixed assets, also up to $5 million, through certified development companies. SBA says it can be used for long-term machinery and equipment with a useful remaining life of at least 10 years. Read that twice before you build a plan around 504 for a high-hour used forklift. A remaining life of ten years is a real test. A 2014 truck with a tired mast may not pass it. 504 also cannot be used for working capital or inventory. If a broker waves "SBA" at a rough truck, ask which program and what remaining life they are claiming.

How dealers and equipment lenders actually sit in the deal

Used forklifts are commonly financed by the selling dealer through a finance company, or by an equipment lender the buyer already uses. The yard is the seller of record. You pay them. We do not mark up the truck, and we are not in the note. A state seat is $1,250 a month to the dealer for first look on buyer files. A seller introduction is $295 when the paper is real. Neither of those is your interest rate, and neither is a down payment.

Do not wire anyone a down payment for a truck this desk has not put in writing. That line is on the finance page because the category attracts it. A real lender or a real yard will paper a deal you can read. A stranger who needs the deposit today, before you have seen the serial, is not a financing plan.

Questions that belong in the term sheet

• Who holds title during the term, and who holds it at the end?
• Is there a residual or a buyout, and is the amount written?
• What did the lender assume for age and hours? A truck that fails the inspection can fail the credit file too.
• Is the battery included in the financed price, or is it a separate invoice? On a 5,000 lb electric, the book says to quote it as its own line. The band is $12,000 to $28,000.
• Who pays freight, tax, and a doc fee? The illustration on our finance page leaves them out on purpose.
• What maintenance is included, and what is named as excluded?
• What is the penalty for paying the note off early, or for returning the truck early?

Bring the grade with those questions. Grade A is cleared in writing. Grade B is work ready, priced inside the band. Grade C is a project. Financing a grade C truck can be rational if the payment still works after the repairs. It is not rational if the payment was calculated on a grade B price and the mast is extra.

A plain order of operations

1. Name the truck on a request: class, fuel, mast, hours ceiling, ZIP, week, budget.
2. Let one dealer have four hours. Compare whatever they offer to the book.
3. Walk the truck. Hours and the inspection list are the tools.
4. If you need a payment picture, use the finance illustration with a price you are actually discussing. Change the APR yourself. We will not supply one.
5. Ask for a lender introduction on the request if you want one. Read the paper they send. Then decide cash, finance, or lease.

Nothing on this page is a credit offer, a rate, or tax advice. The SBA pages linked below are the public descriptions of those programs. Your lender and your accountant are the ones who can tell you what you qualify for.