How Much Do Monthly Payments For Excavator Finance Cost?
If you’re in the construction business and need an excavator, chances are you’re thinking about whether to purchase or finance one. While buying a new excavator seems like the easiest option, not all business owners have enough funds to shoulder such expensive equipment. Excavator financing is an agreement where a lender agrees to buy the equipment and you can choose to rent it for an agreed period or gain ownership after the contract term. It’s a great equipment finance solution for most business owners since the equipment itself serves as collateral and it usually only takes 24 hours for your application to be approved. So, which excavator finance option is better for your business?
Equipment Loans vs. Lease: Which Should You Choose?
This depends on how often you plan to use an excavator. You may want to ask yourself these questions first before making that big decision:
- How frequently will you use the equipment?
- Which project/s will you use it for?
Benefits of Excavator Loans
- Better ROI – with loaning, the equipment is already yours—technically. Meaning, you can use it whenever you want and take up more excavation contracts in the future. While loans can be a bit more expensive than leases, this single investment can increase your business’s revenue considerably.
- Flexible payment terms – with this excavator finance option, repayment schedules can last for a year up to a few years. Depending on the lender and the equipment’s value, you can make monthly, quarterly, semi-annually, or annual payments.
- Full ownership – as mentioned, the equipment is yours after repaying the loan. You can then opt to rent it out or sell it to make extra money for your business. You can modify it to suit your needs as well, and unlike leases, you’re not charged for any damages during the rental period.
Benefits of Excavator Leases
- Great for short-term use – let’s say you’re going to use the excavator for a single project only. Choosing this excavator finance option where you rent the equipment makes more sense and is more practical.
- Competitive advantage – leasing equipment means you can always gain access to the latest technology. This makes your business stand out from the others and become or remain an industry leader.
- Say no to obsolete equipment – most business owners end up buying the excavator at the end of the term since there’s no point returning it. If ever they need an upgrade, they’ll buy the equipment once the term ends and trade it to a dealer for a different or newer equipment.
How Much Will You Usually Pay For Excavator Finance?
Monthly payments will depend on a variety of factors, including:
- Contract term length
- Cost of the excavator and added accessories
- Your business’s credit score
- How long you’ve been in the business
Say your business has been operating for two or more years and you’d like to apply for $25,000 equipment finance. Assuming you have good to perfect credit, here are the approximate monthly payments for different loan terms:
- 2 years (24 months) – $1,250 to $1,350/month
- 3 years (36 months) – $850 to $975/month
- 4 years (48 months) – $650 to $775/month
- 5 years (60 months) – $525 to $625/month
As you can see, monthly repayments become cheaper the longer the excavator finance term gets. You may think that this is an attractive option but remember that you will end up spending more on your excavator the longer the term period. In short, if your budget can afford a shorter term, the better.
On the other hand, if you’re a new business owner, expect a much higher rate for each loan term. Lenders may also ask for a security deposit or collateral, like other construction equipment or anything with a license plate on it. Here are your estimated monthly payments gave the same scenario:
- 2 years (24 months) – n/a
- 3 years (36 months) – $1,069 to $1,159/month
- 4 years (48 months) – $874 to $969/month
- 5 years (60 months) – $762 to $860/month
Why Choose Us As Your Excavator Finance Brokers?
Buying new construction equipment outright can have a considerable impact on your business’s cash flow. With most equipment coming in at more than $100,000, there’s no wonder why excavator financing is a popular option among business owners.
Here at mhf Finance, we’ve partnered with a range of competitive lenders to provide you with the right lending solution. As your earthmoving equipment brokers, we compare products, recommend the right solution that matches your needs, and take care of the process from start to finish so you can get a great cash investment from a reliable lender.
Want to know more about our other solutions other than excavator finance? Then drop us a line and we’ll contact you right away!