How do you finance a skid steer? Most buyers use an equipment loan or an equipment lease, either through a bank, an equipment focused lender, or the manufacturer’s own financing arm. New and used skid steers both finance readily, terms commonly run 48 to 60 months, and down payments range from as little as 0 to 10 percent for strong credit and newer units up to 20 percent or more for older, private party, or challenged credit purchases. The financing structure you choose also affects a significant tax benefit that most buyers never hear about until it’s too late to use it.
Key takeaways
- Equipment loans and leases are both widely available for new and used skid steers, with terms of 48 to 60 months most common and up to 72 to 84 months for newer units.
- Down payments typically run 0 to 10 percent for strong credit and newer equipment, rising to 20 percent or more for older units, private party purchases, or thinner credit files.
- A loan, an Equipment Finance Agreement, or a one dollar buyout lease all qualify for the Section 179 deduction. A fair market value or TRAC lease generally does not, since you’re not treated as the owner for tax purposes.
- For 2026, the Section 179 deduction limit is widely reported at $2,560,000, with a $4,090,000 phase-out threshold, reflecting the 2025 tax law’s changes plus inflation adjustment. A small number of sources still cite older, lower figures, so confirm the current number with your CPA before you file.
- Financing doesn’t reduce the deduction. You can generally deduct the full purchase price in the year the skid steer is placed in service, even if you’ve only made one or two loan payments by year end.
What a skid steer actually costs
New skid steers commonly range from roughly $30,000 for a compact model up to $80,000 or more for a larger, fully equipped unit, with attachments adding further cost on top. Used units vary widely based on hours, condition, and age, and can meaningfully undercut new pricing while still qualifying for the same financing and tax treatment described below.
Your financing options
1. Equipment loan
You own the machine from the start, the balance decreases as you pay, and at the end of the term the skid steer is fully yours to keep, sell, or trade. This is the most common structure for buyers who plan to keep the machine long term and want to build equity in it along the way. Rates are priced on risk, not just your credit score: equipment age, seller type, time in business, and cash flow all factor in alongside your credit profile.
2. Equipment lease ($1 buyout or fair market value)
A lease lowers upfront cost and can offer more flexibility, but the two common lease structures behave very differently.
- A one dollar buyout lease functions economically like a loan. You’re effectively financing the full purchase price, and at the end of the term you own the equipment for a nominal one dollar payment. This structure generally qualifies for Section 179, since you’re treated as the owner for tax purposes throughout.
- A fair market value (FMV) or TRAC lease typically comes with lower payments, since you’re paying for the use of the equipment rather than financing full ownership, and at the end of the term you either buy it at its then current market value, return it, or renew. The lessor retains ownership during the term, so this structure generally does not qualify for the Section 179 deduction. Instead, your lease payments are typically deducted as an ordinary business expense as you make them.
Neither structure is universally better. A $1 buyout lease or a straight loan makes sense if you want ownership and the upfront tax deduction. An FMV lease makes sense if you expect to upgrade equipment frequently and value lower payments and flexibility more than either ownership or the immediate write off.
3. Equipment Finance Agreement (EFA)
An EFA is a hybrid structure that functions much like a loan for tax and ownership purposes, while sometimes offering more flexible documentation than a traditional bank loan. Like a $1 buyout lease, an EFA generally qualifies for Section 179 since it establishes you as the owner of the equipment.
4. Dealer or manufacturer captive financing
Major skid steer manufacturers operate their own financing arms, often with promotional rates tied to specific models or times of year. Bobcat, Caterpillar, John Deere, Kubota, and Case (through CNH Industrial Capital) each run financing programs through their dealer networks. These can offer genuinely competitive promotional terms, particularly on new equipment, but confirm the actual structure (loan versus lease, and which lease type) directly with the dealer, since this determines your Section 179 eligibility exactly as described above.
5. SBA loans
An SBA 7(a) loan can be used to finance equipment as part of a broader business financing package, and sometimes offers longer terms and lower rates than conventional equipment financing. The tradeoff is a slower, more document heavy application process, making this a better fit for a larger purchase or a broader equipment and working capital need than for financing a single machine quickly.
6. Alternative and startup lenders
If your business is new or your credit is still developing, specialized alternative lenders exist specifically for this situation. Expect a higher down payment, a higher rate, and closer scrutiny of your cash flow and any signed contracts or invoices that demonstrate the equipment will generate income. Consistent on time payments on this first machine genuinely make the next piece of equipment easier and cheaper to finance.
What lenders actually look at
| Factor | Why it matters |
|---|---|
| Equipment age, hours, and condition | Older or higher hour units are riskier collateral, which narrows term length and raises down payment expectations |
| Seller type | Dealer and established marketplace purchases finance faster and easier than private party purchases, since documentation is clearer |
| Time in business | Startups can qualify, but expect different terms or a larger down payment |
| Cash flow | Consistent revenue and clean recent bank activity help lenders get comfortable with the monthly payment, especially with a thinner credit file |
| Credit profile | Stronger credit widens your lender options and typically lowers your rate, but it’s one factor among several, not the only one |
New versus used, dealer versus private party
New equipment from a dealer is generally the easiest combination to finance, since the invoice, the specifications, and the seller are all straightforward for a lender to verify, and manufacturer promotional rates are often available. Used equipment finances readily too, but expect closer attention to hours and condition, and a somewhat higher down payment on older units. Private party purchases are the most document heavy path, since a lender has to verify ownership and condition without a dealer’s paperwork behind it, which can extend approval timelines from same day or a couple of days out to a week or two.
Realistic payment examples
Illustrative examples based on common lending structures, not a quote. Your actual terms depend on your specific credit profile, the equipment, and the lender.
| Scenario | Price | Down payment | Term | Estimated monthly payment |
|---|---|---|---|---|
| Used, mid hours, dealer purchase, 650 to 690 credit | $45,000 | $4,500 (10%) | 60 months | Roughly $825 to $930 |
| New, dealer invoice, 700+ credit | $62,000 | $0 to 5% | 72 months | Roughly $890 to $1,020 |
| Older unit, private party, 600 to 640 credit | $38,000 | 20% | 48 months | Roughly $790 to $910 |
Compare total cost across scenarios, not just the monthly payment. A longer term lowers your payment but raises what you pay in total interest over the life of the loan, and a lease’s end of term buyout can quietly make it the more expensive option even when the monthly payment looked lower going in.
The part most guides skip: Section 179 and bonus depreciation
This is where the financing decision and the tax decision meet, and it’s genuinely worth understanding before you choose a structure, not after.
What it is. Section 179 of the tax code lets a business deduct the full purchase price of qualifying equipment in the year it’s placed in service, rather than depreciating it gradually over five to seven years. Construction equipment, including skid steers, excavators, loaders, and their attachments, is squarely the kind of asset this deduction was built for, as long as it’s used more than 50 percent for business purposes.
The current limits. Most current sources put the 2026 Section 179 deduction limit at $2,560,000, with the phase-out beginning at $4,090,000 in total equipment purchases for the year, reflecting the 2025 tax law that roughly doubled the prior limits plus an inflation adjustment. A small number of otherwise credible sources still cite the older, lower figures from before that law took effect, which is a good reminder to confirm the current number directly with your CPA rather than relying on any single published figure, including this one.
Bonus depreciation covers the rest. Above the Section 179 cap, or if a purchase would exceed your business’s taxable income for the year, 100 percent bonus depreciation applies with no dollar limit, and this provision was made permanent for qualifying property placed in service after January 19, 2025. Used together, Section 179 and bonus depreciation mean most equipment purchases can be fully deducted in the first year regardless of which provision ends up doing the work.
Financing doesn’t reduce the deduction. This is the detail that surprises most first time buyers. If you finance a $60,000 skid steer on a 60 month loan or a $1 buyout lease in November, you can generally still deduct the full $60,000 on that year’s tax return, even though you’ve only made one or two payments. For a profitable business in a meaningful tax bracket, the resulting tax savings can exceed the entire first year of loan payments, effectively meaning the deduction helps pay for its own financing.
The structure matters. As covered above, a loan, an EFA, or a $1 buyout lease generally qualifies, since you’re the owner for tax purposes. A fair market value or TRAC lease generally does not, since the lessor retains ownership. If the tax deduction matters to your decision, confirm which structure you’re actually signing before you commit, not after.
New and used both qualify, as long as the equipment is new to your business, so a used skid steer purchased this way gets the same tax treatment as a new one.
One more nuance worth knowing. Some states don’t fully conform to federal bonus depreciation rules even though they follow Section 179, which means an all bonus depreciation strategy that looks optimal on your federal return can create an unexpected state tax addback. This is genuinely a conversation for your CPA, not a blog post, but it’s worth raising directly with them rather than assuming your federal and state results will match.
Attachments
Buckets, forks, augers, brush cutters, and breakers are commonly financed alongside the base machine when they’re listed on the same invoice, and lenders will often roll them into the same loan or lease. Attachments are also separately depreciable assets in their own right for tax purposes, so list every attachment individually on your purchase documentation rather than bundling them into a single vague line item.
Step by step: financing a skid steer
- Set your budget and decide new versus used based on your actual job requirements, not just price.
- Choose your seller. A dealer or an established equipment marketplace will generally get you a faster, cleaner approval than a private party purchase.
- Gather your documents up front: the quote or invoice, basic business information, photo ID for the authorized signer, and proof of insurance coverage.
- Decide whether the Section 179 deduction matters to your decision, and if it does, confirm you’re being offered a loan, EFA, or $1 buyout lease rather than an FMV or TRAC lease.
- Compare at least two or three offers on total cost, not just monthly payment, since term length and structure both meaningfully change what you actually pay.
- Bind insurance and finalize paperwork, then take delivery once funding clears to the seller.
- Talk to your CPA before year end if the purchase timing affects which tax year you want the deduction to land in.
Common mistakes to avoid
- Comparing only the monthly payment. A longer term or a lease with a large end of term buyout can look cheaper monthly while costing meaningfully more overall.
- Assuming any lease qualifies for Section 179. Only certain structures do, and choosing the wrong one for the wrong reason can cost real money.
- Skipping the tax conversation until tax season. The deduction is tied to when the equipment is placed in service, so timing your purchase with your CPA’s input, particularly near year end, can matter.
- Bundling attachments into a vague invoice line. List them individually so they’re properly financed, insured, and depreciated.
- Assuming a private party purchase will move as fast as a dealer purchase. Budget extra time for the additional verification these purchases usually require.
FAQs
Yes, routinely. Lenders pay closer attention to age, hours, and condition than with new equipment, and older or higher hour units may come with shorter terms or a higher down payment.
There’s no single universal cutoff. Strong credit widens your lender options and typically improves your rate, but cash flow, the equipment itself, and your down payment all factor into approval too.
Usually yes, since a dealer’s invoice and documentation are straightforward for a lender to verify quickly, while a private party purchase typically requires more verification and a longer timeline.
A loan, an EFA, or a $1 buyout lease generally qualifies, since you’re treated as the owner for tax purposes. A fair market value or TRAC lease generally does not, since the lessor retains ownership.
Most current sources cite a $2,560,000 limit with a $4,090,000 phase-out threshold, reflecting the 2025 tax law’s increases plus inflation adjustment. Confirm the current figure with your CPA, since a small number of sources still reference older, lower numbers.
No. You can generally deduct the full qualifying purchase price in the year the equipment is placed in service, regardless of how much you’ve actually paid toward the loan or lease by year end.
Often yes, particularly for compact units, through programs that weigh down payment, bank activity, and proof of upcoming work more heavily than time in business alone.
Yes, commonly, when they’re listed on the same invoice as the base machine. List each attachment individually rather than as one bundled line item.
Bottom line
Start with your budget and whether you’re buying new or used, then match your financing structure to what actually matters most to you: ownership and ongoing equity favor a loan or a $1 buyout lease, while lower payments and easier upgrades favor an FMV lease. If the Section 179 deduction is part of your financial planning, confirm your structure supports it before you sign, and loop in your CPA on timing, since a purchase made near year end can change which tax year the benefit lands in.
This is general information, not financial, legal, or tax advice. Rates, terms, and tax law change and vary by lender, state, and individual circumstances. Confirm current details directly with a lender and a qualified tax professional before you commit to a purchase.