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Monday, October 3, 2022

When leasing a forklift, there are often two options available for you to choose from: Closed-End Lease or Open-End Lease. It’s important when doing your initial research of these various leasing programs to understand the pros and cons of both and how they will impact your finances. When choosing to lease a forklift through Toyota Industries Commercial Finance (TICF) you will find a Closed-End Lease to be your only option. The reasoning? Closed-End Leases are the most beneficial to the end customer for liability and Return on Investment (ROI). Explore the differences between both leasing options below to learn why.

Understanding Forklift Lease Options


A basic understanding of Closed-End Leases means that it is closed to the lessee at the maturity of the lease. More simply put, when in a Closed-End Lease, the lessee will make their scheduled monthly payments throughout the agreed-upon term of the lease. At the end of the lease, the lessee has no contingent liability of the lease-end residual. Additionally, the leasing company is under no obligation to sell it to the customer. However, the customer may be provided with an option to purchase the equipment. A Closed-End Lease allows the lessees to simply return the equipment and move on to their next new lease, which means they will receive the latest equipment technology. On a Closed-End Lease, a customer is required to maintain the equipment in a safe operating condition with no liability for the residuals. When leasing a forklift through TICF, lessees are offered cash management flexibility in the structuring of lease payments along with the possibility of the lease payments being tax-deductible.



Toyota Commercial Finance

Looking for a partner with finance packages for all your material handling needs? Toyota Commercial Finance has the tools available to help.



When comparing a Closed-End Lease with an Open-End Lease, an Open-End Lease typically has more flexible terms. However, a downfall is that the lessee takes on the depreciation risk of the asset. This means when a customer enters into an Open-End Lease, they will use the forklift for the entire length of the lease term, and after the lease expires, the customer is liable for the remaining residual balance of the equipment.

Since the lessee has no obligation to purchase the leased asset upon lease expiration and does not have to worry about whether the asset will depreciate more than expected throughout the course of the lease, it is often noted that Closed-End Leases are better for the average person.


Typically, a Closed-End Lease comes with a fixed rate and a term that will run for a certain amount of time (example: 60 months). The lessee might want to terminate the agreement early, a move that often incurs additional fees for the early exit. For forklifts procured through such an agreement, there are often annual operating hour limits that tend to stay around 2,000 hours. If the use of the forklift exceeds those limits, the lessee is then responsible for paying additional fees. Furthermore, the lessee is responsible for any excess wear and tear that occurs with the asset.

At the conclusion of a Closed-End Lease, the lessor might look to sell the asset at its depreciated value. It is possible that the lessee might still seek to purchase the asset at this new rate, and there may even be incentives offered to complete such a deal at a reduced price.

When financing a forklift or forklift fleet, always remember to ask a lot of questions and obtain as much information as possible. Your local authorized Toyota Dealer and Toyota Industries Commercial Finance are happy to provide you with any additional information you need as you begin your forklift leasing process.

Posted by tfinco at 10/3/2022 8:47:00 PM
Monday, November 5, 2018

In less than 60 days new accounting rules will impact operations, and organizations whose finance and operations personnel are on the same page will benefit the most.  Selecting the right financing is just as important as choosing the right equipment.  No matter the fleet size, these changes will compel an even greater collaboration between those who cut the checks and those who rely on forklifts every day.  

The Financial Accounting Standards Board (FASB) has approved changes to Accounting Standard Codification (ASC) 842, which affects operating leases.  On January 1, 2019, the Finance Accounting Standards Board's FASB13 will take effect.  FASB13 calls for every lease to be classified as either an operating lease or capital lease based on specific criteria. 

Currently, capital leases are reported on the balance sheet as an asset and liability.  Operating leases, however, are supposed to be footnoted on the balance sheet but are expensed on the income statement.  The new guidance generally stipulates that lessees will be required to recognize both Capital and Operating leases as assets and liabilities for leases with term of more than 12 months.  Beginning Jan. 1, 2019, all leases (capital and operating) will be required to be accounted for on the balance sheet as right-of-use (ROU) asset and lease liability on their balance sheet. * 

“This will have a couple of significant impacts to companies. First, having all leases on the balance sheet will give creditors greater visibility to total liabilities. Secondly, many companies did not require capital approval of off-balance-sheet acquisitions such as rentals and operating leases, which made it quicker and easier to obtain equipment.  The increased scrutiny associated with on-balance-sheet capital approvals may slow or restrict some companies’ equipment acquisition process, which makes it more important than ever for finance and operations to partner up,” Sue Rice says.  

Leasing is an increasingly popular means of controlling expenses and guaranteeing access to the latest technology.  The best way to keep finance and operations departments aligned is to use a data-driven approach to fleet management.  Data is becoming increasingly important in the material handling industry, which is why telematics systems are growing in popularity.  Toyota T-Matics MOBILE and T-Matics COMMAND deliver important insights about your forklift and operators.  T-Matics offers a solution that gives greater visibility to your fleet's performance.  Some of the features include fleet utilization/optimization, web-based dashboards & reporting, electronic hour meter collection, fully mobile, impact detection, etc.  Bottom line...What gets measured, gets managed.  

Still have questions?  Dillon Toyota Lift is here to help.  We can help determine what equipment and finance options are best for you in the long-term.  

*We encourage customers discuss these changes with their Accountants, Auditors and Creditors to better understand the effects these revisions may have on their business.

Posted by tfinco at 11/5/2018 7:04:00 PM
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