Rent, Lease, or Buy: Skid Steer Loaders
“In 1959 the M-200 Melroe self-propelled loader was introduced, this loader was, in effect, the first Bobcat loader. The Bobcat name was introduced in 1962.”
–Bobcat Company, Wikipedia
Ever since skid loaders were first manufactured in 1960 by what is now known as the Bobcat company, they have quickly become one of the most standard pieces of equipment for construction and landscape contractors. Skid loaders feature highly-advanced steering systems, and hydraulic booms allowing them to be lighter and smaller, meaning that they are more maneuverabile and more affordable than other loaders. Nonetheless, financing these versatile and useful machines in an important issue for every landscape contractor. Here are some useful points about the different options available.
Skid Loader Sales
If you are interested in purchasing a skid loader, its cost will depend on the loader’s size, age, features, and manufacturer. A used skid loader usually costs between $3,000 and $80,000. A new skid loader can cost $15,000-$100,000. Skid loader manufacturers include Caterpillar, Volvo, John Deere, JCB, Komatsu, Terex, Moxy, New Holland, Case, Bobcat, Daewoo, Gehl, Hyundai, Kanga, Mustang, Ramrod, Scattrak, Thomas, Toro, and more. For the cost to finance or lease a new skid loader, contact a dealer near you.
Skid Loader Rental
Though skid loaders are relatively inexpensive, they are often more practical to rent than own. You can rent them daily, weekly, or monthly depending on your need. The longer you keep a skid loader, the cheaper it is per day. Depending on the model, a loader rents daily for $100-$350, weekly for $300-$1200, and monthly for $1,000-$3,200. You can visit the web to research a rental company in your area.
It is recommended that customers consult with their professional taxation and financial advisers to determine the taxation and financial treatment of their preferred finance option. Often times, different financing options can significantly affect year-end taxes in a positive way.
More and more businesses are choosing the lease option when acquiring a skid steer loader. Leasing offers a variety of arrangements, time frames and payment methods. A finance lease is an equipment rental arrangement with lease payments generally being fully tax deductible. It allows you (the lessee) to select the equipment of choice and use it as though you were the owner. This requires the lessee to take care of routine servicing, maintenance, registration and insurance.
Terms are negotiable within a range of 12 to 60 months. At the end of the term, the lessee can offer to purchase the skid steer loader or hand it back. The lessee is also responsible for the residual value by way of an indemnity.
• Security of fixed payments and interest rates
• Preserves working capital – funds can be invested in other parts of the business
• Tax efficient – lease payments are generally tax deductible
Business Vehicle Loan
A business vehicle loan is a flexible and tax effective means of financing a skid steer loader. Under a business vehicle loan your business owns the skid steer loader and the financer takes a mortgage over it.
You can choose to structure your loan over a 12 – 60 month term and incorporate a final balloon payment to match your monthly payments with your cash flow requirements. Interest is calculated daily and extra repayments can reduce the loan period and interest payable.
• No GST on repayments
• The skid steer loader is an asset of your business
• Payments can be structured to suit your business requirements
• Depreciation allowances may be claimed
A term purchase represents the ideal choice if a company seeks to own their industrial equipment at the end of the repayment term. That is, the ownership of the equipment passes to the customer upon payment of the final instalment.
The arrangement can be structured either to be fully amortised over the term, or payments can be set by structuring a “balloon” payment as a final instalment. It is structured to preserve business capital whilst paying for the equipment from generated income.
For tax and accounting purposes, the operator is treated as the owner – i.e. ‘on-balance sheet financing’. Interest rates are fixed for the term, which is negotiable within a range of 12 to 60 months. This option best suits those who aim to eventually own their equipment.
• Unit is shown as an asset on the balance sheet
• Depreciation allowances may be claimed
• Interest can be offset against taxable income.
Reprinted with permission from Honda Skid Steer Loaders and Toyota Skid Steer Loaders online