Skid Steer Loans vs. Leasing: Which Option Is Right for Your Business?

Adding a skid steer to your fleet is a big decision. Whether you’re in construction, landscaping, agriculture, or material handling, the right equipment keeps your business moving. But when it comes to a major equipment purchase, should you buy with a loan or lease? Each option comes with its own financial impact, and what works best depends on your business’s needs, cash flow, and long-term plans.

In this guide, we’ll break down the pros and cons of these most common types of skid steer financing, helping you decide which route makes the most sense for your operation. Whether you’re looking for long-term ownership or a flexible financing solution that keeps your fleet up to date, understanding your options will put you in the best position to make a smart investment.

Understanding Skid Steer Loans

If long-term ownership and building equity in your equipment are priorities, a skid steer loan can be a smart investment. Instead of paying the entire cost of a new or new-to-you skid steer upfront, you borrow the funds and make monthly payments until the loan is repaid. At the end of the term, the equipment is yours. This approach allows you to spread out the cost while still adding a valuable asset to your fleet.

Loan terms typically range from 3 to 7 years, depending on the lender and your business’s credit profile. The length of the loan impacts both monthly payments and the total interest paid, so choosing the right term is an important part of the financing decision.

Pros of Skid Steer Loans

Financing a skid steer with a loan gives your business long-term control over the equipment, making it a great option for companies that plan to keep their machines for years. Beyond ownership, loans come with financial benefits that can support your business’s growth and stability, including:

• Full Ownership: Once the loan is paid off, the skid steer belongs to your business. That means no ongoing payments, no renewal decisions, and the ability to use or resell the equipment as you see fit. Over time, ownership typically costs less than having multiple leases, making it a cost-effective solution for businesses that use skid steers regularly.
• No Usage Restrictions: With a loan, you have the freedom to use the skid steer equipment as much as needed without worrying about extra costs. You can tackle heavy-duty jobs or run multiple shifts without incurring penalties for putting the machine to work.
• Tax Advantages: Business owners who finance their equipment through a loan can take advantage of tax deductions, including Section 179, which allows you to write off a large portion of the skid steer’s cost in the first year. Depreciation benefits also help reduce taxable income over time, putting more cash back into your business.
• Building Business Credit: Making on-time payments on an equipment loan strengthens your company’s credit history, which can help when applying for future financing options. A strong credit profile makes it easier to secure better terms on future loans.

Cons of Skid Steer Loans

While financing a skid steer comes with long-term benefits, it also requires a larger upfront investment and ongoing responsibilities. Before committing to an equipment loan, it’s important to consider the potential downsides and how they might impact your business. Here are some challenges to keep in mind:

• Higher Upfront Costs: Most skid steer loans require a down payment, typically 10% to 20% of the equipment cost. That means if you’re purchasing a $50,000 skid steer, you could need to provide $5,000 to $10,000 in cash upfront before you can finance the rest. While this initial cost helps reduce monthly payments, it can be a strain on cash flow, especially for small businesses or those looking to expand their fleet without tying up too much capital.
• Long-Term Commitment: Unlike leasing, where you can swap out equipment every few years, financing a skid steer loader means committing to a single piece of heavy equipment for the long haul. Once you own it, you’re responsible for maintenance, repairs, and potential downtime if something goes wrong. While this gives you more control, it also means budgeting for unexpected costs over the equipment’s lifespan.
• Depreciation: Like any piece of equipment, a skid steer loses value over time. Even though you’ll own it once the loan is paid off, it may not hold its original resale value. After five years, a well-maintained used skid steer may retain 40-50% of its original price, but heavy wear and tear can lower that even further. If your business regularly upgrades equipment, depreciation could make leasing a more attractive option.

Best Fit for Skid Steer Loans

For businesses that want to own their equipment, lower long-term expenses, and gain financial control, a skid steer loan is often the smartest decision. Companies that use skid steers daily and plan to keep them for many years will benefit the most from this financing structure. Once the loan is paid off, the machine is fully owned, eliminating monthly payments and reducing overall costs compared to continuous leasing.

Businesses with strong cash flow that can handle a down payment and maintenance costs will also find loans to be a cost-effective investment. While financing requires an upfront commitment, it provides greater flexibility—allowing businesses to modify, resell, or trade-in their equipment without restrictions. Additionally, making on-time loan payments strengthens business credit, which can open doors to better financing options in the future.

Understanding Skid Steer Leasing

Leasing a skid steer can give your business access to the equipment you need without the long-term commitment of ownership. Instead of financing a purchase, you would pay a fixed monthly amount to use the machine for a set period, typically between 24 and 60 months.

At the end of the lease, you’ll usually have a few options: renew the lease, upgrade to a newer model, or purchase the skid steer at a predetermined price. This flexibility makes leasing an attractive choice for companies that frequently update their equipment or want to preserve cash flow while still meeting demand.

Pros of Skid Steer Leasing

Leasing a skid steer offers businesses more flexibility and lower upfront costs compared to financing through a loan. For companies that prefer predictable expenses or frequently upgrade their equipment, leasing can be a budget-friendly option that keeps operations running smoothly. Here’s a closer look at why some businesses choose leasing over buying:

• Lower Upfront Costs: Unlike traditional financing, which often requires a 10% to 20% down payment, many lease agreements have little to no upfront costs. This makes leasing a great choice for businesses that want to preserve cash flow for other expenses like payroll, materials, or expansion efforts.
• Easier Equipment Upgrades: Leasing gives businesses access to the latest skid steer equipment without being locked into long-term ownership. At the end of the lease, they can upgrade to a newer model with the latest technology, fuel efficiency, and features—ensuring they always have the right tools for the job.
• Fixed Monthly Costs: With leasing, businesses pay a set monthly amount, making it easier to manage budgets. Since most lease agreements include maintenance, companies don’t have to worry about unexpected repair costs, keeping financial planning predictable even during slow months.
• Potential Tax Benefits: Lease payments may be fully deductible as an operating expense, reducing taxable income and providing savings at tax time. For some businesses, this makes leasing a cost-effective solution compared to purchasing, where depreciation deductions vary over time.

Cons of Skid Steer Leasing

While leasing offers flexibility and lower upfront costs, it also has some drawbacks that businesses should consider. Since lease payments don’t build equity, and usage is often restricted, leasing may not be the best fit for companies that rely on their skid steer equipment for the long haul. Here are some additional potential downsides:

• No Ownership Equity: Unlike skid steer loans, lease payments go solely toward using the equipment, not owning it. Once the lease term ends, there’s no asset to resell or use as collateral. If your business plans to keep a skid steer for many years, purchasing may be the more cost-effective solution in the long run.
• Usage Restrictions: Many lease agreements come with hourly usage limits and wear-and-tear clauses. Exceeding these limits can lead to additional fees at the end of the lease. Businesses with heavy workloads or unpredictable job demands may find these restrictions challenging to manage.
• Higher Long-Term Costs: While leasing may seem like a budget-friendly option upfront, making monthly payments indefinitely can add up. Over multiple leasing terms, the total cost may end up exceeding the price of purchasing a skid steer outright. For companies that plan to use their skid steer loaders for many years, an equipment loan might be the better financial decision.

Best Fit for Skid Steer Leases

Leasing a skid steer is best suited for businesses that prioritize flexibility, lower upfront costs, and the ability to upgrade equipment frequently. Companies that rely on the latest technology, fuel efficiency, or specialized attachments will benefit from leasing, as it allows them to stay competitive without committing to long-term ownership.

Leasing is also a great option for businesses that prefer predictable expenses and minimal maintenance responsibilities. Since lease agreements often include fixed monthly payments and maintenance packages, companies can avoid unexpected repair costs and simplify budget planning. This makes leasing an attractive choice for businesses with seasonal operations or fluctuating workloads that don’t want to invest heavily in equipment they may not use year-round.

For startups or businesses in a growth phase, leasing provides an accessible way to acquire equipment without tying up cash flow in a large down payment. With little to no upfront cost, companies can allocate their capital toward expansion, marketing, or hiring while still securing the skid steer equipment they need.

Find the Right Financing for Your Business with Commercial Fleet Financing

Choosing between a skid steer loan or lease isn’t just a financial decision—it’s about partnering with the right lender to ensure your business has the equipment it needs to grow and succeed. At Commercial Fleet Financing (CFF), we specialize in helping businesses like yours secure fast, flexible, and transparent financing for skid steers, compact track loaders, and a full range of construction equipment.

For the last 30 years, we’ve worked with businesses in construction, landscaping, agriculture, and material handling, understanding the unique demands of your industry. Whether you need to upgrade your fleet, replace outdated equipment, or secure financing with manageable payments, our team is committed to helping you find the best solution—quickly and without the hassle of traditional lenders.

What to Look for in a Financing Partner

Not all financing companies are the same. When choosing a lender, you need a partner that understands your industry, offers flexible financing options, and provides a seamless funding experience. Here’s what to consider:

• Industry Experience: Does the lender understand your business and the equipment you rely on?
• Flexible Terms: Can you customize loan or lease options to match your cash flow and business goals?
• Fast Approvals: Will you get access to funding quickly so you can stay productive?
• Transparent Pricing: Are there hidden fees, or is everything clearly outlined upfront?

Why Choose CFF?

CFF makes it easy to finance the equipment you need—on your terms. Our process is built for busy business owners who don’t have time for complicated applications or long approval waits. Here’s why thousands of companies trust us for their financing needs:

• Flexible Loan & Lease Options: Every business is different, which is why we offer custom financing solutions to fit your budget. Whether you’re looking for low monthly lease payments or a loan that builds equity, we’ll help you find the best structure for your needs.
• Fast Approvals & Funding: We know time is money. Our streamlined process gets you approved quickly, so you can secure funding and get to work without delays.
• No Hidden Fees—Just Straightforward Financing: We believe in transparent financing with no surprises. Our loan and lease agreements are clear and simple, giving you the confidence to make the right decision for your business.
• Expert Support from Industry Professionals: Our team specializes in equipment financing and understands the unique challenges of your industry. We’re here to help you navigate the financing process and secure the best terms for your business.

Let’s Get Your Equipment Financed—Fast & Easy

The right financing choice can make all the difference in how your business operates, grows, and remains competitive. It doesn’t matter if you’re looking for long-term ownership through a loan or the flexibility of leasing, your decision should align with your financial strategy, cash flow, and equipment needs.

Working with CFF means your skid steer financing journey will be simple, fast, and hassle-free. With 30 years of industry experience, we understand the unique challenges businesses face and are committed to helping you secure the right equipment with custom financing solutions that fit your needs.

Don’t let financing slow down your business. Contact us today and let our team of experts help you find the best loan or lease option for your skid steer—so you can stay productive, grow your fleet, and keep moving forward.