Excavator Finance: Power Up Your Construction Projects

Excavator Finance: Power Up Your Construction Projects
Excavator Finance

EXCAVATOR FINANCE

Excavator finance is a strategic financial solution that empowers construction businesses to acquire the essential equipment they need to thrive.

Excavators are the workhorses of many construction sites, undertaking a variety of tasks like digging foundations, trenching, and material handling.

While these machines are undeniably powerful and versatile, their upfront purchase cost can be a significant hurdle for businesses. This is where excavator finance comes in.

Benefits of Excavator Finance

Excavator finance offers a range of advantages for construction businesses, making it a compelling alternative to outright purchase. Here are some key benefits to consider:

Improved cash flow: Financing an excavator allows you to spread the cost over a set repayment term, typically several months or years. This frees up valuable working capital that can be used for other business needs, such as hiring employees, purchasing materials, or taking on new projects.

Enhanced affordability: High-performance excavators can be expensive investments. Financing makes them more accessible, allowing businesses of all sizes to acquire the equipment they need to compete effectively.

Potential tax advantages: Depending on your specific tax situation, financing an excavator may offer certain tax benefits, such as depreciation deductions. It’s important to consult with a qualified tax advisor to understand the potential tax implications for your business.

Flexible payment options: Financing providers offer a variety of loan and lease structures with varying terms and down payment requirements. You can choose a financing option that best suits your business’s budget and cash flow situation.

Access to latest equipment: Financing allows you to invest in newer, more efficient excavator models. This can lead to increased productivity, lower operating costs (due to improved fuel efficiency), and a competitive edge on construction projects.

Financing a Wide Range of Excavators

Excavator finance isn’t limited to just one type of machine. At DotCapital, we understand that construction projects require a variety of excavators to tackle specific tasks. Here’s a glimpse into the types of excavators you can finance to empower your construction business:

Crawlers (standard excavators): These versatile workhorses, known for their stability on rough terrain, are ideal for digging foundations, trenches, and basements.

Wheeled excavators: Offering superior mobility and speed on paved surfaces, wheeled excavators excel in urban construction, roadworks, and utility projects.

Long reach excavators: With an extended arm and boom, these excavators are perfect for demolition projects, reaching over obstacles to remove debris or perform controlled demolitions.

Mini excavators: Compact and manoeuvrable, mini excavators are invaluable for landscaping, tight spaces, and indoor demolition tasks.

High reach excavators: Similar to long reach excavators, high reach models boast an even greater reach, ideal for dredging, bridge construction, and working on slopes or stockpiles.

Specialty excavators: Beyond these common types, there are specialised excavators designed for specific applications, such as forestry mulching or recycling attachments.

Types of Excavator Finance

Excavator finance comes in two main categories: excavator loans and excavator leases. Understanding the differences between these options is crucial for selecting the most suitable solution for your business.

Excavator loans (Chattel mortgages): This is a secured loan where the excavator you purchase serves as security for the loan. You own the equipment after the loan is fully repaid. Loan terms typically range from 24 to 84 months, with interest rates determined by your creditworthiness and the loan amount.

Excavator leases: With an excavator lease, you essentially rent the equipment for a set period (usually 24 to 60 months).  At the end of the lease term, you may have the option to purchase the excavator for a predetermined residual value, return it to the lessor, or renew the lease.

Factors Affecting Excavator Financing Approval

Securing excavator finance requires demonstrating your business’s creditworthiness and ability to repay the loan or lease. Here are some key factors that lenders and lessors consider when evaluating your application:

Credit score: A strong credit history plays a significant role in obtaining excavator loan approval. A good credit score indicates a responsible borrower and can lead to more favourable loan terms, such as lower interest rates.

Down payment: A larger down payment demonstrates financial commitment and reduces the lender’s risk. It can also lower your monthly payments and the total cost of financing.

Business financials: Lenders and lessors will review your business financial statements, including income statements and balance sheets. Low doc & no doc options are also available. Strong financials with consistent profitability and positive cash flow increase your chances of approval.

Equipment age and value: The age and condition of the excavator you wish to finance can impact loan terms. Newer excavators typically command higher loan amounts and better interest rates compared to older models.

Business experience: Experience in the construction industry is a plus factor. A proven track record demonstrates your ability to manage projects and generate revenue, which can reassure lenders.

How to Apply for Excavator Finance

Obtaining excavator finance involves a straightforward application process. Here’s a breakdown of the key steps:

Gather necessary documents: The documents needed for excavator finance vary. Full applications require tax returns and financials, while low doc options may only need Business Activity Statements. No doc applications typically don’t require income documents.

Compare loan and lease options: Research various lenders and lessors to find the most competitive rates and terms for excavator finance. Consider factors like interest rates, down payment requirements, and lease terms (if applicable).

Submit your application: Once you’ve chosen a lender or lessor, complete the application form and submit it along with the required documents. The application process will also involve a credit check.

Awaiting approval: Lenders and lessors will review your application and assess your creditworthiness and business financials. The approval timeframe can vary depending on the lender and the complexity of your application.

Finalise the agreement: Upon approval, you’ll receive a loan agreement or lease contract outlining the specific terms and conditions. Carefully review the document before signing to ensure you understand all the details.

Consider working with an equipment finance broker. They can guide you through the process, help you compare options, and ensure you secure the most suitable financing solution for your needs.

Additional Considerations for Excavator Financing

While securing excavator loan is a significant step towards acquiring the equipment you need, there are some additional factors to consider for a successful financing experience:

Trade-in options: Thinking of upgrading? Ask about trade-in options for your existing equipment. This can reduce your down payment on a new excavator.

Financing for used equipment: Don’t need brand new? Financing options are also available for quality used excavators.

Residual value (Leases): If you opt for an excavator lease, understand the concept of residual value. This is the estimated value of the excavator at the end of the lease term. If you plan to purchase the excavator at the lease end, a higher residual value translates to a lower final purchase price.

Maintenance and insurance costs: Factor in the ongoing costs of excavator maintenance and insurance when budgeting for your financing. Regularly maintaining your excavator will ensure it operates efficiently and minimizes the risk of unexpected repairs.

Apply for Excavator Finance with DotCapital

Looking to unlock the power of excavators for your construction projects? DotCapital can help you secure the excavator finance you need. We offer competitive rates and terms on excavator loans and leases, tailored to your unique business requirements.

Benefits of Using DotCapital:

  1. Significant industry experience: Our team has over 28 years of experience in banking & finance.
  2. Access to a network of lenders: We work with a wide range of lenders, increasing your chances of securing financing.
  3. Streamlined application process: Our team guides you through every step of the application process.
  4. Expert advice: Benefit from our expertise in construction equipment financing.

Get a Free Quote Today!

Ready to take the next step? Call DotCapital today on 03 8707 2892 or click “Get a Pre-approval” to speak with an equipment finance specialist and explore your excavator finance options.

Excavator Finance Frequently Asked Questions (FAQs)

Here are some frequently asked questions about excavator finance to help you make informed decisions:

How can I get the best excavator finance deal?

Consider these strategies. Compare rates and terms from multiple lenders and lessors. Consider an equipment finance broker, they can guide you through the process and help you secure the most suitable option. Gather all required documents and present a strong finance application.

Can I finance an excavator with my ABN?

Yes, having an ABN is a key requirement for financing an excavator in Australia.  Many lenders and brokers offer excavator finance specifically for businesses with an ABN. This allows construction companies to acquire essential equipment without a large upfront investment.

Can I get excavator finance with bad credit?

Even with bad credit, excavator finance options exist. Lenders offer specialised loans with higher interest rates or stricter down payments. Consider alternative lenders, showcase strong business financials, or involve a guarantor with good credit to improve your application. Consult a finance broker to potentially secure excavator finance despite your bad credit history.

How much down payment I need for excavator finance?

The down payment required for excavator finance depends on your creditworthiness, the lender, and the loan type. Typically, expect a higher down payment (up to 20%) for new businesses or those with bad credit. Conversely, established businesses with strong credit scores may qualify for lower or even no down payment options.

How long does it take to get approved for excavator finance?

Excavator finance approval times vary depending on application complexity, lender processes, and your credit history. Generally, expect faster approvals (24-48 hours) for simple applications with good credit, while complex applications or those with bad credit may take a week or longer. Be prepared with all documents to expedite the process.

What are the fees associated with excavator finance?

Expect several fees with excavator finance: interest (main cost), application fee, establishment fee, potential valuation fee, and early termination fee (leases only). Carefully review the agreement to understand all fees before signing.

Should I get an excavator loan from a lender or a finance broker?

Deciding between a lender or a finance broker for your excavator loan? Brokers search a network of lenders to find the best fit for you, saving you time and effort. Choose a broker for expert guidance or if your credit needs work. Go directly to a lender if you have a trusted bank relationship.

What is a good interest rate for excavator finance?

Scoring a “good” excavator finance rate depends on your credit (higher score, lower rate), loan type (loans vs leases), and market conditions. Generally, expect rates from 8% to over 14% depending on your creditworthiness. Shop around and improve your credit score to secure the best possible rate.

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