Best Skid Steer Financing: 4 Options to Lower Your TCO
That shiny new skid steer with all the attachments isn’t going to finance itself. Contrary to what many dealers will tell you, manufacturer financing at “0% APR” isn’t always the best deal when you factor in foregone cash rebates and hidden fees.
Skid steer financing allows buyers to spread payments over time using loans, leases, or equipment financing agreements. Terms usually range from 24 to 72 months with interest rates between 4% and 10%. Approval depends on credit score, business history, and equipment cost.
The best skid steer financing deals offer low interest rates, flexible terms, and minimal down payments.
| Best Overall 🏆 | Crestmont Capital |
| Seasonal Payments | Beacon Funding |
| Best for Startups | Equipment Trader |
| Best for Bad Credit | First Capital |
Skid Steer Financing Options
Several financing options are available for businesses looking to buy skid steer loaders. When choosing a financing option, businesses should consider their financial situation, equipment needs, and long-term goals.
Factors such as skid steer pricing, credit score, down payment amount, and desired ownership affect the best choice for a particular business. These options include:
flowchart TB
A[Skid Steer Financing] --> B[Loans]
A --> C[Leases]
A --> D[Rentals]
B --> B1["Equipment Loans<br/>- Own equipment after repayment<br/>- Higher monthly payments<br/>- Potentially lower long-term costs"]
B --> B2["Manufacturer Financing<br/>- Often 0% APR for 48-60 months<br/>- May eliminate cash rebates<br/>- Special promotions available"]
B --> B3["Bank Loans<br/>- Competitive rates for established businesses<br/>- Good credit required<br/>- Flexible repayment terms"]
C --> C1["Equipment Leasing<br/>- Lower upfront costs<br/>- Lower monthly payments<br/>- More flexibility to upgrade"]
C --> C2["Seasonal Payments<br/>- Match payments to revenue cycles<br/>- Easier cash flow during slow periods<br/>- Available from specialized lenders"]
D --> D1["Short-term Rentals<br/>- No upfront costs<br/>- Most flexible option<br/>- Highest long-term costs"]
style A fill:#f96,stroke:#333,stroke-width:2px
style B fill:#bbf,stroke:#333,stroke-width:1px
style C fill:#bbf,stroke:#333,stroke-width:1px
style D fill:#bbf,stroke:#333,stroke-width:1pxLoans
Equipment loans allow businesses to borrow money to purchase a skid steer loader and repay it over time with interest. Loan terms vary depending on the lender and the borrower's creditworthiness. For example, CASE offers 0% financing for up to 48 months on new skid steer loader models—pretty hard to beat if you qualify.
Leases
Equipment leasing allows businesses to use a skid steer loader for a specific period in exchange for monthly payments. At the end of the lease term, the business can return the loader, purchase it at a predetermined price, or renew the lease. Leasing can be a good option for businesses that want to avoid a large upfront investment or prefer to use newer equipment regularly.
Leasing allows businesses to stay up-to-date on the latest equipment and technology. However, it's important to be aware of potential downsides, such as hour restrictions or tire restrictions that may be included in the lease agreement—those "minor details" can come back to bite you if you're not careful.
Rentals
Skid steer rentals are suitable for short-term projects or businesses that only occasionally need a loader. Rentals offer flexibility and eliminate the long-term commitment associated with loans or leases.
Types of Skid Steer Financing
Within the broader categories of loans and leases, several specific types of skid steer financing are available:
Manufacturer Financing
Many skid steer manufacturers offer financing programs through their captive finance companies. These programs may provide competitive rates and flexible terms, often including special promotions or incentives. For instance, Bobcat offers financing options as low as 0% for 48 months or cash rebates in lieu of financing.
John Deere also has a 0% APR for 60 months offer on select models. These deals can be great, but remember they're designed to move inventory—if you're shopping during slow seasons, these offers tend to get even sweeter.
Bank Loans
Traditional bank loans can be a viable option for skid steer financing, especially for established businesses with good credit. Banks may offer competitive interest rates and flexible repayment terms.
Equipment Financing Companies
Specialized equipment financing companies focus on providing loans and leases for various types of equipment, including skid steer loaders. These companies often have expertise in the construction and landscaping industries and can offer tailored financing solutions.
For example, Beacon Funding offers flexible financing programs with seasonal payments to match a business's revenue cycle. This type of financing allows businesses to align their payments with their revenue cycle, making it easier to manage cash flow during slower periods—a huge advantage for seasonal operations.
Dealer Financing
Some equipment dealers offer financing options through partnerships with lenders. Dealer financing can be convenient, but it's essential to compare rates and terms with other options to ensure the best deal. Lenders specializing in business equipment loans may offer more advantageous rates and terms.
Costs Associated with Skid Steer Financing
The costs of skid steer financing vary depending on the type of financing, the lender, and the borrower's creditworthiness. It's crucial to carefully review the terms and conditions of any financing agreement to understand all associated costs and avoid unexpected expenses. Some common costs include:
Interest Rates: Interest rates on skid steer loans and leases can range from 0% to over 10%, depending on the factors mentioned above. That difference might not sound like much on paper, but it can mean thousands of dollars over the life of the financing.
Monthly Payments: Monthly payments are determined by the loan or lease amount, interest rate, and repayment term.
Down Payments: Down payments are commonly required for skid steer loans but may be waived by some lenders. When required, they can range from 0% to 20% or more of the purchase price. For example, Crestmont Capital offers 100% financing with no down payment and covers soft costs such as freight and installation—an approach that can preserve your cash reserves for other business needs.
Fees: Lenders may charge various fees, such as application fees, origination fees, and documentation fees. Always ask for a full breakdown before signing anything.
Initial Purchase Price: The initial purchase price of a skid steer can vary significantly depending on the model, size, features, and condition of the equipment.
Attachments: The cost of attachments, such as grapple buckets, pallet forks, and augers, can add considerably to the overall cost. Don't forget to factor these in—they're often what make your skid steer truly useful for specific applications.
Ongoing Maintenance: Ongoing maintenance costs, including repairs, servicing, and replacement parts, should be factored into the total cost of ownership. This is where many buyers get into trouble, forgetting that financing solves the acquisition problem but not the ongoing care and feeding of the machine.
Eligibility Requirements for Skid Steer Financing
Lenders typically have specific eligibility requirements for skid steer financing, including:
Credit Score
A good credit score is essential for qualifying for favorable financing terms. Lenders often consider credit scores of 650 or higher to be acceptable, but some may accept lower scores with compensating factors.
Understanding your personal and business credit scores is crucial for securing the best financing rates and terms. Think of your credit score as your financial report card—it might not tell the whole story, but it's often the first thing lenders look at.
Time in Business
Established businesses with a longer operating history generally have an easier time securing financing than startups. If you've been operating for less than two years, expect more scrutiny and possibly higher rates.
Financial History
Lenders may review the business's financial statements, tax returns, and bank statements to assess its financial health and ability to repay the loan or lease. When evaluating a loan application, lenders consider the income potential of the skid steer and how it will be used to generate revenue. Being able to clearly explain how the machine will pay for itself can make a significant difference in approval odds.
Collateral
In some cases, lenders may require collateral, such as other equipment or real estate, to secure the loan. A larger down payment can not only lower monthly payments but also improve the chances of loan approval.
Financing a Skid Steer with Bad Credit
Individuals with bad credit may face challenges when seeking skid steer financing, but options are still available. First Capital offers a specialized bad credit equipment financing program that considers factors beyond credit scores, such as income stability and collateral. Alternative lenders and programs tailored to unique situations can provide solutions for those with less-than-perfect credit.
Let's be real—bad credit will cost you more, but it doesn't have to be a deal-breaker. Many lenders are more interested in your recent payment history and current cash flow than what happened three years ago. Coming to the table with a larger down payment and clear documentation of your business's financial health can help overcome credit hurdles.
Pros and Cons of Skid Steer Financing Options
Each skid steer financing option has its advantages and disadvantages:
| Feature | Loan | Lease | Rental |
|---|---|---|---|
| Ownership | You own the equipment after repayment. | You don't own the equipment unless you buy it at the end of the lease term. | No ownership. |
| Upfront Costs | Higher down payment. | Lower upfront costs. | No upfront costs. |
| Monthly Payments | Higher monthly payments. | Lower monthly payments. | Fixed rental payments. |
| Flexibility | Less flexibility. | More flexibility to upgrade equipment. | Most flexible option. |
| Tax Benefits | Tax benefits may be available. | Tax benefits may be available. | No tax benefits. |
| Long-Term Costs | Potentially lower long-term costs. | Potentially higher long-term costs. | Highest long-term costs. |
The rental vs. buy decision comes down to utilization—if you'll use the machine more than about 60% of the time, owning or leasing typically makes more financial sense. If your skid steer will sit idle for months at a time, you might be better off renting when needed.
Impact of Skid Steer Financing on the Overall Cost of Ownership
Financing can significantly impact the overall cost of owning a skid steer loader. Factors to consider include:
Interest Expense: Interest paid on loans or leases adds to the total cost of the equipment. A 2% difference in interest rate might not sound like much, but on a $50,000 machine over five years, that's roughly $2,500—enough for a set of new tires or several service appointments.
Depreciation: Skid steer loaders depreciate over time, and financing can affect the depreciation schedule and potential resale value. Understanding how quickly your specific make and model loses value can help you time your purchase and eventual sale or trade-in.
Maintenance Costs: Some financing agreements may include maintenance packages, which can help manage these costs. These packages aren't always a good deal, but they do provide predictability, which can be valuable for budget planning.
Tax Benefits: Financing a skid steer can provide tax benefits, such as deducting interest payments from taxable income, which can lower the overall cost of ownership. Section 179 deductions can also provide significant first-year tax advantages—talk to your accountant before making assumptions about what you can deduct.
Best Practices for Skid Steer Financing
| Best Practice | Description |
|---|---|
| Understand Your Financial Situation | Assess your credit score, cash flow, and budget to determine what you can afford. Know your numbers before you start shopping—you'll be in a much stronger negotiating position. |
| Explore Various Financing Options | Compare offers from different lenders, including manufacturers, banks, and equipment financing companies. Don't just take the first offer that comes along, even if it seems convenient. |
| Compare Interest Rates and Terms | Carefully review the interest rates, repayment terms, and any associated fees before signing a financing agreement. Read the fine print—those "administrative fees" and "document preparation charges" can add up quickly. |
| Save for a Down Payment | A larger down payment can lower your monthly payments and improve your chances of approval. Aim for at least 10-20% if possible. |
| Check for Dealer Promotions | Take advantage of any special offers or incentives from dealers or manufacturers. End-of-quarter and end-of-year can be particularly good times to find aggressive financing offers. |
| Understand Lease Options | If considering a lease, understand the terms, including the lease duration, buyout options, and any mileage or usage restrictions. Pay particular attention to those hour limits—they can really come back to haunt you. |
| Negotiate the Best Deal | Don't hesitate to negotiate with lenders to secure the most favorable terms. Everything is negotiable, from interest rates to documentation fees. |
| Consider Used Equipment | Used skid steer loaders can be a cost-effective option, but carefully evaluate their condition and maintenance history. A 2-3 year old machine with low hours can offer significant savings with minimal additional risk. |
| Factor in Total Cost of Ownership | Consider the total cost of ownership, including interest, depreciation, and maintenance, when making financing decisions. The purchase price is just the beginning of what you'll spend on this machine. |
Current Trends in Skid Steer Financing
Recent trends in skid steer financing include:
Increased Inventory Levels: The used skid steer market has experienced a surge in inventory levels, leading to downward pressure on prices. This is great news if you're in the market for a used machine—there are deals to be had if you know where to look.
Shifting Sales Trends: While used skid steer sales have declined, new financed skid steer sales have increased. This suggests businesses are taking advantage of attractive financing terms on new equipment rather than going the used route.
Focus on Flexibility: Businesses are increasingly seeking flexible financing options that align with their cash flow and equipment needs. Seasonal payment structures, skip-payment options, and step-up payment plans are becoming more common as lenders recognize not all businesses have consistent monthly revenue.
Emphasis on Technology: Financing can help businesses acquire newer skid steer models with advanced technology and improved efficiency. Features like telematics, improved fuel economy, and advanced controls are driving some buyers toward newer models despite the higher price tags.
Conclusion
The right skid steer financing aligns with your cash flow and usage patterns, not just the lowest monthly payment. A machine that sits idle becomes an expensive liability, regardless of financing terms.
Today's market favors buyers with increased inventory and flexible options, but diligence matters. Scrutinize the numbers with the same care you'd use selecting the machine itself—your business's financial health depends on it.
FAQ
How much is it to finance a skid steer?
Skid steer financing typically costs between $200 and $1,000 per month, depending on loan terms, interest rates (ranging from 4% to 15%), and equipment price (usually $10,000 to $50,000). Down payments often range from 10% to 20% of the total cost.
What credit score is needed to buy a skid steer?
A credit score of 620 or higher is generally required for skid steer financing, though some lenders may accept scores as low as 580 with higher interest rates. Prime rates are typically reserved for borrowers with scores above 700.
How hard is it to get financed for a Bobcat?
Financing a Bobcat is moderately accessible with a credit score above 620, stable income, and a debt-to-income ratio below 40%. Subprime borrowers may face higher interest rates or require collateral.
What credit score is needed for Bobcat financing?
Bobcat financing typically requires a credit score of 620 or higher, with optimal terms available for scores above 700. Borrowers with scores below 600 may need to provide collateral or a co-signer.
