Excavator financing

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    Chris Godfrey

    Page written by Chris Godfrey. Last reviewed on July 11, 2024. Next review due October 1, 2025.

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    Excavators – also known as diggers or mechanical shovels – can be some of the most flexible and useful heavy machinery you can get.

    Operated by industries as varied as construction, agriculture, forestry and mining, they can be the powerhouse of any business. However, diggers don’t come cheap and paying for this type of heavy machinery with working capital can often be prohibitive. Fortunately, there’s an answer to this problem: Excavator financing. Pay for the equipment as you use the equipment. Give your organization the machinery it needs without hurting cash flow.

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      What is excavator financing?

      Excavator financing – also known as equipment financing – is a type of business loan used to support the purchase of new or used excavators. This type of financing gives organizations an alternative way to pay for one or more diggers without putting strain on working capital by buying heavy machinery with cash.

      How does excavator financing work?

      If your organization needs an excavator, you have two ways to get one: You can hire a digger from a heavy equipment rental agency, or you can buy or lease one. While hiring may be best if you only need an excavator for a short period and very rarely, the costs can rapidly add up if you use these machines a lot – easily reaching $5,000 a month depending on the model of machinery you hire. In the mid to longer term, this does not make sense. For businesses that need an excavator regularly or for longer periods, and like the idea of owning the equipment in the future, buying or leasing the machinery is a better way to go. 

      There are two types of excavator financing:

      Finance (also known as an excavator loan)

      Excavator finance is a straightforward business loan. You make a down payment on the excavator and then pay off the balance of the purchase price, plus interest, with regular payments over a fixed term contract. The digger acts as security for the loan. When the agreement comes to an end, the equipment is paid for and yours to keep. 

      Advantages of an excavator loan:

      • Own the equipment outright when the contract ends
      • Add the machinery as an asset to your balance sheet from date of purchase
      • Utilize Section 179 tax benefits to lower your tax burden

      Disadvantages of excavator loan:

      • Higher monthly payments because you are paying back the total digger price


      An excavator lease is really a long-term rental agreement. Because you are only financing some of the purchase price, leasing typically has lower monthly payments than a finance/loan. With a lease, you make a down payment and then pay a regular sum plus interest each month to use the digger. At contract end you can either give the excavator back to the lender, renew the lease at a different cost per month, or buy the digger for the fair market value – this is commonly known as a ‘balloon payment’. 

      Advantages of an excavator lease

      • Lower monthly payments
      • Option to buy the machinery or lease a newer excavator at contract end can give you better financial flexibility

      Disadvantages of excavator lease:

      • Balloon payment could be more than the excavator is worth at contract end
      • Becomes a liability on your balance sheet

      Should I loan or lease an excavator?

      It depends on your business strategy. 

      Choose a loan if:

      • You want to own the excavator at contract end. Depending on how hard the equipment is worked and how many hours of use it gets, diggers tend to have good residual – meaning they hold their value well – so owning the machinery outright at contract end can be a good move. The majority of US excavator buyers choose to finance their purchase.

      Or choose to lease if:

      • You want to move up to a newer excavator when your current contract ends without the hassle of selling your old digger first
      • You want lower monthly payments

      Do I qualify for excavator financing?

      Qualifying for excavator financing is determined by three key factors:

      • Strength of your personal/business credit. Most lenders will want a good credit score along with ‘depth’ – that is a long history of paying your bills on time. They may also want to see ‘comp credit’, which means proof that other businesses have extended credit to you and that you have had successful personal automobile finance before.
      • The length of time your business has been operating. Longer history improves your chances of loan approval.
      • Down payment: It’s possible to get excavator financing with no deposit, but generally, the more you offer to pay at signing, the better your chances of loan approval.

      Typically, you will need to provide a preliminary bill of sale for each excavator you are seeking to buy or lease. The lender may also ask to see your business bank statements and other financial records. Note that some lenders may set a usage limit – total hours the machinery has been worked thus far – on used diggers. Additionally, it is unlikely that you will be able to get financing if the contract exceeds the estimated useful life of the equipment.

      Top tip: Even if you have bad credit, or have been turned down elsewhere, it may still be possible to get the excavator financing you need. Call Swoop today to discuss your situation with a bad credit expert.

      Do I need a down payment to finance an excavator?

      Possibly. If your business has been in business for several years and your credit and financial history are strong, you may be able to finance your next excavator without a down payment. However, newer businesses and those with spotty financial history and weaker credit will typically need to pay an initial deposit. This may vary from being equal to the first one or two monthly instalment payments up to 20% of the purchase price depending on your financial situation.

      What are the excavator leasing rates?

      Excavator leasing rates can fluctuate significantly and are dependent on a matrix of many factors, including:

      • The price of the machinery
      • Your business’ credit profile, years in business and financial strength
      • The duration of the lease
      • The typical residual value of the machinery (what the digger is worth at contract end) 
      • Known problems with the excavator you have selected
      • The industry you operate in
      • Even your business zip code can impact the rate you pay

      Additionally, interest rates are constantly changing, and the costs associated with administering your finance will vary significantly from one lender to another. 

      The best way to find out what your excavator lease will really cost you is to speak to an equipment financing expert now. Get a price that means something to you and isn’t just a guess.

      What is the credit score required to finance an excavator?

      Most lenders will want a minimum personal FICO score of +640, although if you pay a larger deposit, it may be possible to get excavator finance with a score in the mid-500s.

      How to apply for excavator financing

      You should shop around for different financing offers before settling on a deal. You can do this by approaching banks, credit unions and online lenders one by one, or you can use the services of a loan marketplace that will introduce you to a choice of excavator financing deals from different lenders. Some marketplace platforms can also give you advice and help you with the application process. This can be especially useful for business owners who have never taken out a dump truck loan before. 

      What you’ll need:

      • Excavator details including price and details of the seller
      • Your business details and financial records as required
      • Preferred type of financing – loan or lease
      • Contract length request

      Get started with Swoop

      Working with business finance experts can make all the difference when applying for excavator financing. Contact Swoop to discuss your borrowing needs, get help with your application and to compare top-quality excavator financing from a choice of lenders. Get the heavy equipment you need without putting strain on cash flow. Register with Swoop today.

      Written by

      Chris Godfrey

      Chris is a freelance copywriter and content creator. He has been active in the marketing, advertising, and publishing industries for more than twenty-five years. Writing for Wells Fargo Bank, Visa, Experian, Ebay, Flywire, insurers and pension funds, his words have appeared online and in print to inform, entertain and explain the complex world of US consumer and business finance.

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      At Swoop we want to make it easy for SMEs to understand the sometimes overwhelming world of business finance and insurance. Our goal is simple – to distill complex topics, unravel jargon, offer transparent and impartial information, and empower businesses to make smart financial decisions with confidence.

      Find out more about Swoop’s editorial principles by reading our editorial policy.



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