How Much Does it Cost to Lease Construction Equipment?
Last Updated: February 01, 2022
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Companies are increasingly turning to leasing instead of buying due to the high cost of construction equipment. Leasing allows you to get the equipment you need with little or no money down. The financing is easier to obtain than a bank loan. Once the lease is up you can trade in your old equipment for a newer model.
Construction equipment leases are available for anything from one piece equipment that costs a few thousand to a fleet of machines costing several million. Nearly every type of heavy equipment is available for lease:
- Aerial platforms
- Earth moving equipment
- Lighting equipment
- Surveying Equipment
You can opt for new or used equipment.
Because leasing heavy equipment requires little or no money down, it's ideal for companies that are low on cash or those that want to keep the cash they have in the bank. Many leasing companies allow you to finance 100% of the costs, including tax delivery, installation, and training. However, some require a security deposit and a down payment.
Heavy Equipment Leasing Average Costs #
The cost of leasing construction equipment depends on the size of your lease, your credit score, and seasonal demand and where your business is located.
A standard rate for leasing business equipment is $40 to $60 per month for every $1,000 purchased. At this rate, a $5,000 machine will cost you $200 to $300 per month while a $100,000 machine will run $4,000 to $6,000 per month.
Many heavy equipment financiers and financial websites offer online payment calculators to help you estimate the total cost of an equipment lease. The Financial Calculators website offers side-by-side comparisons of buying vs. leasing costs. According to that site:
- A $20,000 piece of equipment will cost $424 per month for a 24-month term lease. That is with a $1,000 down payment and a $500 security deposit. It also assumes an interest rate of 8%.
- A $100,000 lease with the same terms will cost $2,315 per month.
Keep in mind that the above estimates are merely guidelines. The actual monthly rate can be much higher or lower depending on your credit score and history. It's also important to note that you can lower the cost of you monthly payments by extending the length of the term or increase monthly payments by choosing a shorter term.
Construction Equipment Financing Rates #
Equipment financing rates also vary based upon the size of the lease, your credit score and payment history, and where your business is located.
- Equipment priced less than $100,000 usually comes with a higher finance rate - anywhere from 8% to 20%.
- Larger, more expensive heavy equipment can generally be leased with a financing rate of 6% to 8%.
The average heavy equipment lease spans two to five years. Because leases are easier to obtain than bank loans, the interest rates tend to be higher. But the credit and capital requirements are not as strict. However, even some companies that are flush with capital are opting for leasing in order to upgrade their equipment every few years.