Forklift Hire Purchase Malaysia: Complete Guide to Ownership & Financing

Hire purchase (HP) is the most popular way to acquire forklifts in Malaysia. This guide explains everything you need to know about forklift HP financing.

Whether you run a warehouse, manufacturing facility, or distribution center, you’ll learn exactly how HP works, what it costs, and whether it’s right for your business.

What is Hire Purchase?

Hire purchase is a financing method where you acquire equipment by paying in installments. You use the equipment immediately but don’t own it until the final payment is made.

In simple terms:

You “hire” the forklift by paying monthly
You’re “purchasing” it gradually over time
After the last payment, ownership transfers to you
The forklift becomes your asset

Legal structure:

The finance company owns the forklift during payment period
You have the right to use it exclusively
You must insure and maintain it
You become the legal owner after final payment

Popular in Malaysia because:

Preserves working capital (70-90% of equipment cost)
Immediate use without full cash payment
Fixed monthly payments (easier budgeting)
Builds business assets (appears on balance sheet)
Tax benefits (interest and depreciation deductible)

How Forklift Hire Purchase Works

Step-by-Step Process:

1. Choose Your Forklift

Select brand, model, and capacity
New or used (up to 10 years old accepted)
Get quotation from dealer
Decide on specifications (diesel, electric, LPG)

2. Apply for HP Financing

Submit application with documents
Credit evaluation (1-3 business days)
Receive approval and terms
Review interest rate, tenure, monthly payment

3. Pay Down Payment

Typically 10-30% of forklift price
Lower down payment = higher monthly payments
Higher down payment = better interest rate
Can negotiate based on credit profile

4. Sign HP Agreement

Legal contract between you and finance company
Specifies all terms and conditions
Finance company pays dealer on your behalf
You receive forklift immediately

5. Make Monthly Payments

Fixed amount for entire tenure
Payment includes principal + interest
Insurance and maintenance your responsibility
Late payment penalties apply

6. Ownership Transfer

After final payment, forklift is yours
Finance company issues ownership documents
Remove any liens or encumbrances
Asset fully owned by your business

Payment Calculation Example:

Forklift Details:

Price: RM80,000 (2.5-ton electric forklift)
Down payment: 20% = RM16,000
Loan amount: RM64,000
Interest rate: 8% p.a. (reducing balance)
Tenure: 48 months (4 years)

Monthly Payment: RM1,560

Total Cost Breakdown:

Down payment: RM16,000
Monthly payment: RM1,560 x 48 = RM74,880
Total paid: RM90,880
Total interest: RM10,880

Use our financing calculator for your specific forklift.

Hire Purchase vs Leasing vs Cash Purchase

Comparison Table:

Factor	Hire Purchase (HP)	Operating Lease	Cash Purchase
Ownership	Yours after final payment	Never (rental)	Immediate
Upfront Cost	10-30% down	Minimal deposit	100% cash
Monthly Payment	Fixed (principal + interest)	Fixed (rental)	None
Asset on Books	Yes (depreciates)	No	Yes (depreciates)
Balance Sheet Impact	Liability + Asset	Off-balance	Asset only
Tax Benefits	Interest + depreciation	Full rental deductible	Depreciation only
Flexibility	Committed for tenure	Can return/upgrade	Sell anytime
Maintenance	Your responsibility	Often included	Your responsibility
Insurance	Your responsibility	Often included	Your responsibility
Total Cost	Moderate	Higher (long-term)	Lowest
Best For	Ownership goal	Flexibility needed	Strong cash position

Hire Purchase Advantages:

✅ Build Asset Value

Forklift becomes yours
Increases business net worth
Can sell or trade-in later
Better than renting (no permanent asset)

✅ Fixed Costs

Monthly payment never changes
Easy budgeting and forecasting
No surprise rental increases
Lock in today’s interest rate

✅ Immediate Use

Start operations right away
Don’t wait to save full amount
Revenue generation begins immediately
Forklift pays for itself over time

✅ Tax Benefits

Interest payments tax deductible
Depreciation deductible (capital allowances)
Better than leasing for some businesses
Consult accountant for your situation

✅ Financing Availability

Easier approval than bank loans
Accept bad credit with higher rates
Finance up to 90% of value
Used equipment accepted

Hire Purchase Disadvantages:

❌ Long-Term Commitment

Locked in for 12-60 months
Cannot easily exit
Must continue payments even if business slows
Early settlement may have penalties

❌ Interest Costs

Pay more than cash price
RM80,000 forklift costs RM90,880 total
Longer tenure = higher total interest
Interest rate higher than bank loans

❌ Maintenance Responsibility

All repairs your cost
Downtime affects operations
Must budget RM300-800/month for maintenance
No manufacturer support after warranty

❌ Depreciation Risk

Forklift loses 10-15% value per year
May owe more than it’s worth initially
Resale value uncertain
Technology may become outdated

❌ Insurance Mandatory

Comprehensive coverage required
RM2,000-4,000 per year cost
Must be maintained throughout tenure
Finance company listed as beneficiary

When to Choose HP:

Choose Hire Purchase if:

You want to own the forklift eventually
You need fixed monthly costs for budgeting
You have sufficient down payment (10-30%)
You plan to use forklift for 5+ years
You want to build business assets
Your business has stable cash flow

Choose Leasing if:

You need flexibility to upgrade frequently
You want predictable all-inclusive costs
You prefer off-balance-sheet financing
You’re uncertain about long-term needs
You want maintenance included
Your business has variable cash flow

Choose Cash if:

You have RM80,000+ available
You don’t need that cash for other operations
You want lowest total cost
You want no debt on balance sheet
You prefer simplicity (no monthly obligations)
You can still maintain adequate working capital

Monthly Payment Breakdown

Understanding how your monthly payment is calculated helps you make better financing decisions.

Payment Components:

1. Principal Repayment

Portion that reduces loan amount
Increases with each payment (reducing balance)
Example: Month 1 = RM1,113, Month 48 = RM1,550

2. Interest Charge

Portion that pays finance company
Decreases with each payment
Example: Month 1 = RM447, Month 48 = RM10

3. Total Monthly Payment

Fixed amount throughout tenure
Example: RM1,560 every month for 48 months

Reducing Balance Method:

Most forklift HP uses reducing balance (monthly rest):

How it works:

Interest calculated on remaining loan balance
As you pay principal, balance decreases
Next month’s interest is on lower balance
More efficient than flat rate method

Example: RM64,000 loan at 8% p.a. for 48 months

Month	Opening Balance	Principal	Interest	Payment	Closing Balance
1	RM64,000	RM1,113	RM447	RM1,560	RM62,887
12	RM53,120	RM1,190	RM370	RM1,560	RM51,930
24	RM38,940	RM1,301	RM259	RM1,560	RM37,639
36	RM23,850	RM1,427	RM133	RM1,560	RM22,423
48	RM1,550	RM1,550	RM10	RM1,560	RM0

Total Interest Paid: RM10,880

Flat Rate vs Reducing Balance:

Flat Rate (avoid if possible):

Interest calculated on original loan amount
Same interest amount every month
Total interest much higher
Often quoted as lower percentage (misleading)

Example: RM64,000 loan at 4% p.a. flat for 48 months

Interest per month: RM64,000 x 4% ÷ 12 = RM213.33
Total interest: RM213.33 x 48 = RM10,240
Sounds cheaper than 8% reducing balance
But effective interest rate is actually 7.2% p.a.!

Always ask: “Is this reducing balance or flat rate?”

Factors Affecting Your Interest Rate:

Credit Profile (biggest factor):

Excellent credit (700+): 7.5-9% p.a.
Good credit (650-699): 8-10% p.a.
Fair credit (600-649): 9-11% p.a.
Bad credit (below 600): 10-12% p.a.

Forklift Age:

Brand new: 7.5-9% p.a.
1-3 years old: 8-10% p.a.
4-6 years old: 9-11% p.a.
7-10 years old: 10-12% p.a.

Down Payment:

30% down: Better rate (lower risk)
20% down: Standard rate
10% down: Higher rate (higher risk)

Loan Tenure:

12-24 months: Lower rate (fast payoff)
36-48 months: Standard rate
60 months: Higher rate (longer risk)

Business Profile:

Established business (5+ years): Better rate
New business (1-2 years): Higher rate
Good payment history: Better rate
Multiple existing loans: Higher rate

Forklift Brand:

Premium brands (Toyota, Mitsubishi, Crown): Better rate
Mid-tier brands (Nissan, TCM, Komatsu): Standard rate
Budget brands (Chinese makes): Higher rate
Reason: Resale value affects risk

Ownership Transfer Process

After you make the final payment, ownership doesn’t automatically transfer. You need to complete specific steps.

Steps to Transfer Ownership:

1. Confirm Final Payment

Ensure last installment is paid
Request statement showing zero balance
Get confirmation letter from finance company
Keep proof of payment

2. Request Release Documents

Contact finance company’s recovery department
Request ownership release letter
Request lien release (if applicable)
May take 2-4 weeks processing

3. Receive Ownership Documents

Original invoice (in your name)
Bill of sale from finance company
Lien release letter
Any registration documents

4. Update Records

Update insurance policy (remove finance company as beneficiary)
Update asset register
File documents safely
Inform accountant (for fixed asset records)

5. Remove Identification Marks

Finance company may have placed ID stickers
GPS tracker may need removal (if installed)
Confirm no outstanding obligations

Timeline:

Week 1-2 after final payment:

Submit request to finance company
Provide proof of payment

Week 3-4:

Finance company processes request
Prepares ownership documents
Internal verification

Week 5-6:

Documents issued to you
Collect in person or receive by mail
Verify all documents complete

Common Delays:

Incomplete payment (one installment missed)
Insurance arrears not settled
Damage repair obligation not fulfilled
Lost original documents (requires reissuance)

What Happens After Transfer:

You now fully own the forklift:

Can sell or trade-in
Can use as collateral for other financing
No restrictions on usage
Full discretion on maintenance

Important notes:

Asset appears on balance sheet as “Property, Plant & Equipment”
Continue depreciation for tax purposes
Keep ownership documents for resale
Maintain service records (affects resale value)

Tax Benefits of Hire Purchase

Forklift HP provides significant tax advantages compared to cash purchase or leasing.

Tax Deductions Available:

1. Interest Payments

Fully tax deductible as business expense
Example: RM10,880 interest over 48 months = RM2,720/year
Reduces taxable income each year
Immediate cash flow benefit

2. Depreciation (Capital Allowances)

Claim annual depreciation on forklift value
Initial Allowance: 20% of cost
Annual Allowance: 14% of residual value
Accelerated depreciation available under certain conditions

3. Insurance Premiums

Comprehensive coverage required
Fully tax deductible
Example: RM3,000/year saves RM540 tax (18% rate)

4. Maintenance Costs

All repairs and servicing deductible
Spare parts and labor included
Regular maintenance budget RM300-800/month

Tax Calculation Example:

Forklift: RM80,000 (HP with RM16,000 down, RM64,000 financed)

Year 1 Deductions:

Interest paid: RM4,890
Initial allowance (20%): RM80,000 x 20% = RM16,000
Total deductions: RM20,890
Tax savings: RM3,760 (at 18% tax rate)

Year 2-4 Deductions:

Interest paid: ~RM2,600/year (decreasing)
Annual allowance (14%): RM64,000 x 14% = RM8,960/year
Total deductions: ~RM11,560/year
Tax savings: ~RM2,081/year

Total tax savings over 4 years: ~RM10,000+

HP vs Leasing vs Cash - Tax Comparison:

Hire Purchase (HP):

Deduct interest payments (RM10,880 over 4 years)
Deduct depreciation (RM40,000+ over 5 years)
Total deductions: RM50,880
Tax savings: RM9,158 (at 18% rate)

Operating Lease:

Deduct full rental payments (RM2,200/month x 48 = RM105,600)
No depreciation (you don’t own it)
Total deductions: RM105,600
Tax savings: RM19,008 (at 18% rate)
BUT: You don’t own the asset (zero residual value)

Cash Purchase:

No interest to deduct (paid full cash)
Deduct depreciation only (RM40,000+ over 5 years)
Total deductions: RM40,000
Tax savings: RM7,200 (at 18% rate)
BUT: Used RM80,000 working capital upfront

Special Tax Incentives:

Accelerated Capital Allowance (ACA):

Available for certain approved equipment
Claim 100% in first year (instead of 5-7 years)
Must apply to MIDA or relevant authority
Massive cash flow benefit

Investment Tax Allowance (ITA):

For qualifying activities (manufacturing, agriculture)
60-100% allowance on qualifying capex
Set off against 70% of statutory income
Must apply before equipment purchase

Consult your accountant to maximize benefits.

Eligibility Requirements

Who can apply for forklift HP financing, and what do you need?

Business Types Accepted:

Sole Proprietorship:

Individual business owners
Easiest to apply (fewer documents)
Personal credit evaluated
Personal liability for payments

Partnership:

Two or more partners
Partnership agreement required
All partners evaluated
Joint and several liability

Sdn Bhd (Private Limited):

Incorporated company
Company credit + directors’ personal credit evaluated
Corporate guarantee + personal guarantee
Most common for warehouse businesses

Berhad (Public Limited):

Listed or unlisted public companies
Board resolution required
Corporate credit primarily evaluated
Higher financing amounts available

Minimum Requirements:

Business Age:

Ideally 1+ years in operation
New businesses considered (with strong directors’ background)
Must show stable revenue

Credit Score:

No minimum score (we accept bad credit)
CCRIS/CTOS report will be checked
Bad credit = higher interest rate
Defaults may require higher down payment

Monthly Income:

Must cover monthly payment comfortably
Debt service ratio under 60%
Example: RM1,560 payment requires ~RM4,000 minimum income

Down Payment:

10-30% of forklift price
Higher down payment improves approval
Can use trade-in as partial down payment

Insurance:

Comprehensive coverage mandatory
You arrange or use our panel
Must be maintained throughout tenure

Industry:

Warehousing, manufacturing, logistics accepted
Construction, agriculture, retail accepted
Almost all industries accepted

Documents Required:

For Individuals/Sole Proprietors:

Malaysian IC (both sides)
6 months bank statements
Business registration (if any)
Income proof (invoices, contracts, EPF)
Residential proof (utility bill)
Forklift quotation

For Companies (Sdn Bhd):

SSM registration (Form 9, 24, 49)
6 months company bank statements
Directors’ IC copies
Financial statements (last 2 years) - if available
Management accounts (current year) - if available
Business profile
Forklift quotation
Board resolution (authorizing purchase)

For Used Forklift:

All above documents
Equipment inspection report (we arrange)
Seller’s ownership documents
Service history (if available)

Don’t have everything? Apply anyway. We evaluate case by case.

Application Process

How to apply for forklift HP financing - step-by-step.

Quick Overview:

Timeline: 3-7 days from application to approval Approval Rate: high success rate (we rarely reject) Minimum Down Payment: 10% (negotiable) Maximum Age: 10 years old (used forklifts)

Detailed Steps:

Step 1: Initial Inquiry (Day 1)

Forklift type and price
Your business type
Approximate credit standing

Via WhatsApp (fastest):

Message: +60175700889
Send: IC photo + forklift quotation
Response: Within 1 hour (business hours)

Via Phone:

Call: +603-3362 1588
Speak with financing specialist
Get immediate preliminary assessment

Via Email:

Email: info@inghengcredit.com
Attach: Documents + quotation
Response: Within 24 hours

Via Walk-In:

Visit: 47A, Jalan Raya Timur, Klang
Bring: All documents
Face-to-face consultation

Step 2: Document Submission (Day 1-2)

Submit all required documents:

Use checklist above
Submit via WhatsApp/email/in-person
Missing documents will delay approval
We’ll guide you on what’s needed

Step 3: Credit Evaluation (Day 2-3)

We evaluate your application:

CCRIS/CTOS credit check
Bank statement analysis
Forklift valuation check
Business background verification

We look at:

Ability to pay (income vs payment)
Credit history (but bad credit not automatic rejection)
Business stability (operating history)
Down payment amount (higher = better)
Forklift value (good brands easier to approve)

Step 4: Approval Decision (Day 3-5)

You receive:

Approval letter (or conditional approval)
Finalized terms (interest rate, tenure, payment)
Down payment amount required
Conditions to fulfill (if any)

Possible outcomes:

Approved: Ready to proceed
Conditional approval: Fulfill conditions (e.g., higher down payment)
Declined: Reasons provided (rare - we approve high success rate)

Step 5: Agreement Signing (Day 5-7)

If approved:

Review HP agreement carefully
Sign in person (or arrange for you)
Provide post-dated cheques (if required)
Submit down payment

Step 6: Disbursement & Delivery (Day 7+)

We complete the purchase:

We pay dealer directly
You collect forklift from dealer
Insurance activated
First payment typically 30 days later

Total Timeline: 7-14 days from inquiry to forklift in hand

Tips for Fast Approval:

Be Prepared:

Have all documents ready before applying
Organize professionally (clear copies, labeled)
Don’t wait for us to request missing items

Be Responsive:

Answer calls/messages promptly
Provide clarifications same day
Fast response = fast approval

Be Transparent:

Explain credit issues upfront
Provide accurate income information
Honesty builds trust = higher approval chance

Consider Trade-Offs:

Willing to pay higher down payment? (Better rate)
Can accept shorter tenure? (Lower rate)
Negotiate terms that work for both parties

Frequently Asked Questions

General HP Questions:

Q: Can I settle the HP early?

A: Yes! Early settlement is allowed. You’ll receive a rebate on unearned interest (usually calculated using Rule of 78 or actuarial method). Some finance companies charge early settlement fees (1-3% of outstanding balance). Check your agreement for specific terms. Early settlement is beneficial if you have excess cash and want to save on future interest.

Q: What happens if I miss a payment?

A: Consequences depend on your agreement terms:

1-7 days late: Late payment fee (RM50-200)
8-30 days late: Reminder letters, additional interest
31-60 days late: Default notice, credit score impact
61-90 days late: Repossession warning
90+ days late: Forklift repossession, legal action

Best practice: Call us immediately if you anticipate missing payment. We can often arrange temporary relief (payment extension, reduced payment).

Q: Can I trade-in my current forklift as down payment?

A: Yes! Trade-in value can be used as partial or full down payment. We’ll evaluate your current forklift’s value based on:

Brand and model
Age and condition
Service records
Current market value

Example: You have 5-year-old Toyota forklift worth RM30,000. You want new RM100,000 forklift. Trade-in RM30,000 + cash RM10,000 = RM40,000 down payment (40%). Finance remaining RM60,000.

Q: Is maintenance included in monthly payment?

A: No. HP monthly payment covers only principal and interest. You’re responsible for:

Routine maintenance (oil changes, filters, etc.)
Repairs and breakdowns
Spare parts replacement
Annual servicing
Operator training (if needed)

Budget approximately RM300-800/month for maintenance depending on usage intensity.

Forklift-Specific Questions:

Q: Can I finance used forklifts?

A: Yes! We finance used forklifts up to 10 years old. Terms:

Down payment: 20-30% (higher than new)
Interest rate: 8-12% p.a. (based on age)
Tenure: 12-48 months (shorter than new)
Inspection required (we arrange)

Example: 6-year-old Nissan 2.5-ton forklift, RM40,000:

Down payment: 25% = RM10,000
Loan: RM30,000 at 9.5% for 36 months
Monthly payment: RM960

Q: What forklift brands do you accept?

A: We accept all major brands:

Premium (easiest approval):

Toyota (best resale value)
Mitsubishi
Crown
Yale
Hyster

Mid-tier:

Nissan Forklift (good reliability)
TCM
Komatsu
Linde
Jungheinrich

Budget:

Chinese brands (Lonking, XCMG, Hangcha)
Higher down payment may be required
Slightly higher interest rates

Q: Electric vs diesel vs LPG - which is easier to finance?

A: All fuel types accepted. Factors:

Electric forklifts:

Higher upfront cost (RM80K-120K for 2.5-ton)
Lower operating costs (electricity cheaper than diesel)
Better for indoor use (no emissions)
Battery life consideration (8-10 years)

Diesel forklifts:

Lower upfront cost (RM60K-90K for 2.5-ton)
Higher operating costs (diesel fuel)
Better for outdoor use (more powerful)
Longer lifespan (15-20 years)

LPG forklifts:

Mid-range cost (RM65K-95K for 2.5-ton)
Moderate operating costs
Indoor/outdoor versatile
Clean emissions (better than diesel)

Financing terms similar for all types. Choice depends on your operational needs, not financing availability.

Business & Tax Questions:

Q: Can I claim full forklift cost as business expense immediately?

A: No. Under HP, you claim:

Interest payments: Fully deductible as expense (immediate)
Depreciation: Spread over equipment’s useful life (5-7 years)
Initial allowance: 20% first year
Annual allowance: 14% per year on residual value

You cannot claim the full RM80,000 in Year 1. You claim approximately RM16,000-20,000 in Year 1 (initial allowance + interest), then RM10,000-12,000 per year for subsequent years (annual allowance + interest).

Exception: If you qualify for Accelerated Capital Allowance (ACA) or Investment Tax Allowance (ITA), you may be able to claim 100% in first year. Consult your tax advisor.

Q: HP or leasing - which saves more tax?

A: Depends on your situation:

Leasing saves more tax short-term:

Deduct full rental (RM2,200/month = RM26,400/year)
Immediate cash flow benefit
Best for: High profit margin, need immediate deductions

HP builds more value long-term:

Deduct interest + depreciation (~RM12,000-20,000/year)
Lower tax savings per year
But you own asset worth RM80,000 after 4 years
Best for: Asset building, long-term equipment needs

Example comparison:

HP (4 years):

Total tax deductions: RM50,880
Tax savings: RM9,158
End result: You own RM80,000 asset (depreciated value ~RM35,000)

Leasing (4 years):

Total tax deductions: RM105,600
Tax savings: RM19,008
End result: You own nothing (no asset)

Most warehouse businesses prefer HP for asset building.

Ready to Apply?

Now that you understand forklift hire purchase, here’s how to get started.

Next Steps:

1. Calculate Your Numbers

Use our financing calculator
Input forklift price, down payment, tenure
See exact monthly payment
Understand total cost

2. Contact Us for Quote

WhatsApp: +60175700889 (fastest - 1 hour response)
Phone: +603-3362 1588
Email: info@inghengcredit.com
Visit: 47A, Jalan Raya Timur, Taman Rashna, 41200 Klang

3. Prepare Documents

IC copy
6 months bank statements
Business registration (if any)
Forklift quotation
Income proof

4. Submit Application

Via WhatsApp/email/in-person
We’ll guide you through process
Ask us anything - no stupid questions!

5. Get Approved & Receive Forklift

Approval in 3-7 days
Sign agreement
Collect forklift
Start operations immediately!

Why Choose Ing Heng Credit for Forklift HP:

high success rate Approval Rate

We rarely reject applications
Bad credit accepted (higher rates)
New businesses welcomed
Flexible evaluation

Competitive Rates

From 7.5% p.a. (reducing balance)
No hidden fees
Transparent pricing
Better than most competitors

Fast Approval

3-7 days from application to approval
Much faster than banks (2-4 weeks)
Urgent cases can be expedited
Responsive communication

Flexible Terms

12-60 months tenure
10-30% down payment
Used forklifts accepted (up to 10 years)
Customized payment schedules

40+ Years Experience

Since 1985 in equipment financing
Understand warehouse businesses
Know forklift market well
Trusted by 4,000+ clients

Personal Service

Dedicated financing specialist
Speak English, Malay, Mandarin
No pressure sales tactics
Genuine advice for your situation

Contact Information:

Ing Heng Credit & Leasing Sdn Bhd

Office Address: 47A, Jalan Raya Timur Taman Rashna 41200 Klang, Selangor Malaysia

Phone: +603-3362 1588 WhatsApp: +60175700889 Email: info@inghengcredit.com

Operating Hours:

Monday-Friday: 9:00 AM - 6:00 PM
Saturday: 9:00 AM - 1:00 PM
Sunday: Closed (WhatsApp available)

Location:

5 minutes from Port Klang
Near Taman Rashna market
Ample parking available
Wheelchair accessible

Get your forklift financing approved this week. Contact us today!

About the Author:

This guide was written by the Ing Heng Credit & Leasing team, Malaysia’s trusted equipment financing specialist since 1985. We’ve helped over 4,000 businesses acquire forklifts, excavators, lorries, and other equipment through hire purchase and leasing.

Published: December 19, 2025 Category: Equipment Financing Reading Time: 8 minutes Target Audience: Warehouse William - Warehouse operators, manufacturing managers, distribution center owners