Loan vs. Lease for an Excavator: Which Is Better?

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Have you ever considered the advantages of having an excavator for your company? There are a number of projects that are easier to do with an excavator, including:

  • Hauling
  • Digging trenches, foundations, and more
  • Demolition
  • Forestry work
  • River dredging
  • Snow removal

Loan vs. Lease for an Excavator

You can also opt to buy different attachments for your excavator, which are best used on specific projects. This includes grapples, augers, and hydraulic-powered tools like breakers to deal with materials such as concrete or rock. You can also find dozer blades that attach and detach to your excavator. Depending on the kind of work that you do, expanding the type of projects that you can take on can be a good growth opportunity for your business.

If you believe that your company could garner more business by providing excavator services, it might be the right time to add an excavator to your equipment.

Adding equipment to your business is always a mix of excitement and stress. While it can be exciting to buy some new machinery, particularly to expand your business, there can also be a level of stress when it comes to financing. If you are thinking of buying an excavator, there are some options to consider to help you pay for it. It can be expensive to buy new machinery, and not many companies are able to pay upfront for an excavator. You could decide to rent the equipment, but this can be a costly decision and one that doesn’t leave you any further ahead. However, deciding between a lease and a loan to help you cover the cost of an excavator can be a challenge.

Loan vs. Lease

For companies that are considering a loan or lease to pay for an excavator, there are some differences between the two options that are important to understand. One of the most important differences between a loan and lease is that when you have paid the loan off, you own the equipment. If you opt for a lease, there is no expectation of ownership at the end of the lease. You have the choice to either move on and find another excavator to lease or buy, or purchase the one you were leasing.

Another significant difference between loans and leases is the monthly cost. When you decide to lease, the amount you will pay each month will be less than if you have to make loan payments. Another advantage of leasing is that you may be able to use your payments as an expense when you file your taxes.

How Loans Work

If you decide to apply for a loan to pay for your excavator, there are a few things you should know about the process, including how monthly payments are determined. You will need to find a lender who specializes in excavator loans. After you have found a lender that you can work with, you will need to begin the application process.

When it comes to working out the financing details, there are a few things that lenders will look at. These include:

  • Type of excavator (new, used, cost, etc.)
  • The financial situation of your business
  • Your personal credit
  • How long you have been in business
  • The length of the loan

While borrowers may try to get the lowest possible monthly payment, it’s a better financial decision to go for a shorter loan. This will save you a lot of money on the interest payments, which can run into the thousands over time.

It’s also important to understand that if you have been in business for less than two years, you will appear like a bigger risk to lenders and, therefore, will be expected to pay a higher interest rate. However, if you have good credit and can offer up some collateral, you may be able to get a better rate.

The Loan Process

It is important to do some research on the type of excavator you want and how much it will cost. You should also know what your budget is for the equipment. Without this information, you could end up applying for too much or too little. Decide if you want a new or used excavator and start pricing them out before you apply. Some companies will find they can’t afford a new machine with all the features they wanted. This means you will need to be flexible and may have to adjust your plans and budget.

As you prepare your budget, be realistic with your projections about how much more revenue an excavator will bring to your business. This will come into play when you decide how much you can afford for monthly payments.

Another way to reduce your monthly payments is to put a significant down payment to secure the loan. If you can put some money down towards purchasing the excavator, you will appear as less of a risk to lenders and they will be more willing to work with you to find terms that fit you best.


Excavators can be a great addition to your equipment. Because of their versatility and strength, excavators can help you expand your services. They may be the right way to help your business grow. When you are considering adding a piece of equipment to your business, it can be an exciting time. However, there can also be some stress as you consider your financing options. If you are not able to purchase an excavator on your own, then consider a lease or loan to help you obtain the machinery. Yet, there are some differences between each option. With a loan, you will own the equipment when you are done making payments. If you choose to lease an excavator, there is no obligation for you to buy the machine at the end of the lease. Although you could decide to rent an excavator, this can be a costly decision for your business. It is important to do some research on each option so you make the right financial decision for your company.

For more information about loans for excavators, call Truck Loan Center at 1-866-230-0094 or contact us here.


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