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How Much Does Asphalt Paving Equipment Cost?

Posted On: April 14, 2018 author Paul Kendall

You are starting out a new asphalt paving business or are an established paving company looking to upgrade your asphalt paving equipment. Whether you are starting an asphalt company or an established paving business, one question we hear very often is, “How much does asphalt paving equipment cost?” There are a few factors that go into deciding how much you’ll need to pay:

  • Is the asphalt paving equipment new or used?
  • What’s the brand?
  • How many hours of use does it have on it already?
  • Are you paying upfront or leasing?
  • What’s your business’ credit score and credential?

 

Let’s break it down to show how each factor plays into asphalt paving equipment costs.

New Asphalt Paving Equipment vs. Used Asphalt Paving Equipment

It helps to decide ahead of time whether or not you want new or used asphalt paving equipment. Older asphalt paving equipment runs the risk of frequent breakdowns. A breakdown can affect you, as business owner, in multiple ways:

 

  1. Breakdown Delays Are Costly: A breakdown could prevent you from completing the project within the intended time frame. This means that you are not getting paid during your down time and the schedule of all your future work is also impacted.

  2. Asphalt Cools Off Quickly: Asphalt cools of quickly. What that means is that if a breakdown delays the start and completion of your work, the look and finish would not be as good as you intended it to be. You need proper equipment that is in good condition when you are doing anything with Asphalt.

  3. Unhappy customer: Delay and the quality of work have a direct impact on future business opportunities with your customer.

 

If you want a good name, good reviews, and satisfied customers, my opinion is that you should look into new asphalt paving equipment. As a business owner, you should take pride in your work, show pictures of your work on new jobs you are bidding for, provide references to potential leads. A new asphalt paving equipment will tremendously increase your odds of success.

 

If you choose to go the used paving equipment route, ensure that you have an excellent maintenance plan.

 

Ultimately, it comes down to your choice of whether you want to go with new or used paving equipment. Each has its pros and cons, so it’s important to recognize the needs of your business, the funds you have available, and the quality and features of the machine you need.

Buying new is typically more expensive, but may get you a more modern piece of equipment that has no wear-and-tear on it yet. Looking for small asphalt pavers for sale and going the used route allows you to save money, but you may have to deal with the problems that come with older equipment.

You can also choose to go the “used asphalt equipment” route and look for small asphalt pavers on sale. You’ll save money if you can deal with the natural wear-and-tear of construction equipment.

Either way, you can choose to sell your equipment in the end if you’re not satisfied or want to switch to a different model.

An Alternate Solution: Asphalt Paving Equipment Leasing

Another option for you is leasing asphalt paving equipment. Instead of buying a new or used asphalt paver, you could instead choose to lease your heavy asphalt equipment. This gives you the option to use the paver as if you purchased it, but spread payments out across a pre-agreed length of time (for example - 2 to 5 years). You also get to work out whether or not you’ll keep the equipment at the end or return it back to the lender. A lease structure gives favorable tax write offs. Asphalt paving equipment leasing allows you to write off your entire monthly payments off of your taxable income. 

 

Business Financials

After you’ve decided on the type of paver you want to purchase and the way you want to fund it, you’ll have to double check on your own financials.

How’s your credit score? How long or short do you want your payment terms to be? Have you been in business for a while?

 

Credit Score

Your credit score determines the amount of risk your business has in the eyes of a lender.

The higher your score, the more flexible the lender will be. You’ll probably get lower monthly or quarterly payments as a result.

What’s considered a “good” score will vary from lender to lender, but aim for a score of 675 or higher.

You can still get a lease if you’re not at that point yet, but you’ll probably have to handle a slightly increased monthly payment.



Term Length

How long do you want to be making monthly payments? You can choose to go for a shorter term (at increased monthly payment amount) or a longer term (for lower monthly payments, but higher total cost). 

Take a look at your own asphalt business financials and see which is best suited for your construction business.

 

Business Duration

If you’ve been in business for a couple of years, you are showing asphalt equipment leasing companies that you’re working with a business plan that works and that you’re in it for the long run, further improving your monthly rates. While it’s not impossible to get funding if you’re just starting out or don’t have a solid track record for lenders to look at, you may just have to work with higher monthly payments to cover the associated risk that lenders will see.

Once you understand the goals and financials of your business, you can then work with a financier to look through specific plans to lease asphalt paving equipment or to search manufacturers and vendors to directly buy new or used equipment. 

So I’ll start with an example: wanting to lease asphalt paving equipment at a cost of $100K, paid over a period of 2 to 5 years. Let’s assume you have a decent (650) credit score and over 2 years in business.

The following are the estimated monthly payments you would have to make based on the duration of your lease with a $1 buy out:

  • 2 Years Lease - $4,475/mo
  • 3 Years Lease - $3,100/mo
  • 4 Years Lease - $2,400/mo
  • 5 Years Lease - $2,050/mo

 

Let's say you're a start up asphalt company: wanting to finance asphalt paving equipment, paid over a period of 2 to 5 years. Let’s assume you have a decent (650) credit score and under 2 years in business.

The following are the estimated monthly payments you would have to make based on the duration of your lease with a 10% PUT buy out:

  • 2 Years Lease - $4,745/mo
  • 3 Years Lease - $3,510/mo
  • 4 Years Lease - $2,900/mo
  • 5 Years Lease - $2,555/mo

 

The exact amount that your monthly payment will be is dependent on these major factors:

  • Length of lease term.
  • Cost of asphalt paving equipment.

  • Business & personal credit history.

  • The number of years you’ve been in business.

 

Here's a resourceful asphalt equipment loan calculator tool to see what your asphalt equipment finance payments could be. Also includes an amortization schedule for your accountant. 

 

The better your credit and/or business financials are, the cheaper a lender is willing to make your payments. Regardless of how much your monthly payments are, simply keep in mind the opportunities that having asphalt equipment will provide. How much is asphalt paving? The opportunity cost of not generating revenues with your paving equipment is adding up now. Even if your monthly payments seem high, you are likely still going to be turning up a profit due to your ability to take on larger and more ambitious projects that you couldn’t without it.

Call 866-458-4777 & find out Just How Much Asphalt Paving Equipment Will Cost You.

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