Understanding Skid Steer Lease to Own Programs: Options, Benefits, and Considerations

What Is a Skid Steer Lease to Own Program?

A lease to own program for skid steer loaders is a financing arrangement that combines elements of both leasing and purchasing. Unlike traditional rentals or leases where you return the equipment at the end of the term, these programs are structured so your payments contribute toward eventual ownership of the machine.

With a lease to own agreement, you make regular payments over a predetermined period, typically ranging from 24 to 60 months. During this time, you have full operational use of the skid steer loader while building equity in the equipment. At the end of the term, you can exercise your purchase option to take full ownership, often for a nominal fee or final payment.

Caterpillar Financial and other equipment financiers offer these programs as alternatives to traditional purchasing methods, making it easier for contractors and businesses to acquire necessary equipment without significant upfront capital expenditure.

How Skid Steer Lease to Own Works

The lease to own process for skid steer loaders typically follows a structured pathway from application to ownership. First, you select the equipment that meets your specifications—whether new or used—from a dealer or equipment provider. Then you apply for the lease to own program through the dealer or a third-party financing company.

After approval, you sign a contract outlining the terms, including monthly payment amount, lease duration, maintenance responsibilities, and purchase option details. Throughout the lease period, you make regular payments while using the equipment for your projects. These payments are often fixed, making budgeting more predictable.

Most agreements include a purchase option that can be exercised at predetermined points or at the end of the lease term. This option allows you to make a final payment to gain full ownership of the skid steer. Companies like John Deere Financial provide detailed calculators to help visualize how payments contribute to ownership over time.

Some programs allow for early payoff without penalties, while others may have specific terms regarding early termination. Understanding these details before signing is crucial for making the arrangement work in your favor.

Benefits and Drawbacks of Lease to Own Arrangements

Benefits:

• Lower initial costs compared to purchasing outright
• Payments contribute to ownership rather than just equipment use
• Potential tax advantages as payments may be deductible as business expenses
• Opportunity to use newer equipment with updated technology
• Easier qualification compared to traditional loans for many businesses

Drawbacks:

• Higher long-term cost compared to outright purchase with cash
• Responsibility for maintenance and repairs typically falls on the lessee
• Contractual obligations that may limit flexibility
• Potential for higher insurance requirements
• Possible penalties for early termination or excessive equipment wear

For businesses with fluctuating cash flow, the predictable payment structure of lease to own programs can be particularly beneficial. However, companies with substantial capital might find direct purchasing more economical in the long run. Bobcat Financial and other providers often work with customers to determine which option aligns best with their financial situation and equipment needs.

Pricing Overview for Skid Steer Lease to Own Programs

Pricing for skid steer lease to own programs varies widely based on several factors. The machine type, size, and capabilities significantly impact monthly payments, with compact models starting at lower payment levels than larger, more powerful units. New equipment commands higher payments than used skid steers, though newer machines often include warranties that can offset maintenance concerns.

Lease terms typically range from 24 to 60 months, with longer terms resulting in lower monthly payments but higher overall costs due to interest accumulation. Interest rates vary by provider and your credit profile, typically ranging from 4% to 12% depending on market conditions and applicant qualifications.

Many programs require a down payment, usually between 5% and 20% of the equipment value. This initial payment reduces the financed amount and subsequent monthly payments. Some providers offer seasonal payment structures that align with cash flow patterns in industries like construction or agriculture.

Additional costs to consider include insurance requirements, which protect both you and the financing company during the lease period. Maintenance costs should also factor into your budget planning, as most lease to own agreements place maintenance responsibility on the lessee rather than the financing company.

Provider Comparison for Skid Steer Lease to Own Options

When considering a lease to own program for skid steer loaders, comparing providers can help you find the most advantageous terms for your situation. The table below provides a comparison of major providers and their program features:

When evaluating providers, consider not only the financial terms but also the quality of the equipment brands they offer. Some providers specialize in specific manufacturers, while others offer multiple brands. Additionally, examine the flexibility of their programs, especially regarding payment schedules and end-of-term options.

Customer service reputation and dealer network strength are also important considerations, as these factors can significantly impact your experience throughout the lease period. Many contractors find value in working with providers that have local dealerships for service and support.

Conclusion

Skid steer lease to own programs offer a practical pathway to equipment ownership for businesses and individuals who need these versatile machines but wish to avoid large upfront costs. By carefully evaluating the terms, understanding your usage requirements, and comparing providers, you can find an arrangement that balances monthly payment affordability with long-term ownership goals.

Before signing any agreement, thoroughly review the contract terms, including maintenance responsibilities, insurance requirements, and end-of-lease options. Consider consulting with a financial advisor to understand the tax implications and how the arrangement fits into your broader business financial strategy.

With the right approach, a lease to own program can provide access to essential equipment while building equity in an asset that contributes to your operational capabilities and business growth. Whether you choose a new or used skid steer, the flexibility of these financing options makes quality equipment accessible to a broader range of operators and businesses.

Sources

• https://www.bobcat.com/finance
• https://www.catfinancial.com
• https://www.deere.com/en/finance