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Is It Better to Buy, Rent or Lease a Backhoe?

Posted On: September 9, 2017 author Paul Kendall

Backhoes are used for a variety of constructions needs like pushing dirt, moving material, digging, and so on. Backhoes are also used in farming. Backhoes are good for snow plowing as well.

As the demand for the construction of new properties and projects continues to rise, so too does the demand for your construction services continue to increase.

If you are starting or running a construction company, you may be finding yourself in need of a good backhoe at an affordable price. 

Does it make sense to buy, rent or lease a backhoe? 

Let us explore each option and see which one might work best for you

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Difference between Backhoe and Excavator

Often times, people get confused and don’t understand the difference between a backhoe and an excavator. Let us first get this out of the way.

An excavator is a large construction equipment primarily used in industrial and commercial sites. Excavators in general are used for heavy duty workloads.

A backhoe on the other hand is a smaller piece of construction equipment. It is smaller in size than a standard excavator. It is used in low to medium duty work.

It got the name “backhoe” given that it draws dirt back to itself.  

Understanding the difference between an excavator and backhoe is important to determine which one would make perfect sense for your construction needs.

 

 

 

How financially secure are you?

 

The first thing to figure out is whether or not you’ll be able to make the monthly payments of owning a backhoe. 

While each type of financing will have a different monthly payment, if you’re just barely making ends meet, you might not be able to afford financing a backhoe.

On the other hand, if you know that upcoming projects will drastically improve your monthly income, then it might still be a viable option to seek out backhoe leasing or financing.

 

Buying a Backhoe

A backhoe could cost anywhere between ~$15,000 and $150,000 or more based on capacity, size, make, model and whether you are buying it new or used.

Speaking very generically, buying a backhoe is one of the best options you have.

However, it’s also the least likely option for most companies. 

This is because buying a backhoe is obviously going to be very expensive, but in the long run you’ll actually spend less than trying to lease it over a number of years.

This option is really only viable for companies that have a ton of cash on hand and can afford to buy heavy equipment outright.

Financing costs will be much lower when you can purchase it directly, and you may even be able to strike a better deal with the manufacturer or dealer to reduce costs even more.

But not every business can afford this option, which is where renting and backhoe leasing makes more sense.

 

Renting a Backhoe

What’s your upcoming project looking like? Do you think you’ll be using a backhoe for every project afterward? Or do you just need a backhoe for this specific project, or even just a portion of the project? 

If you’re not expecting to use a backhoe all the time, then purchasing or leasing might not be the best option for you financially - unless you just have extra cash floating around, which most people don’t.

When you’re not expecting to use a backhoe (or any heavy equipment for that matter) very often and only for select jobs, then you might actually be able to get more financial mileage out of renting it.

Renting will allow you to finely tune how you’re spending your money instead of sinking monthly payments into a piece of equipment you might not even be using.

Although it doesn’t make sense to rent a backhoe if you plan on using it for years or want to have the ability to resell the backhoe after using it so much.

Bottom line, it comes down to understanding your business’ frequency of backhoe usage. If you use it sparingly on an annual basis, rent it. If you use it often, and can afford it, buy it. If you use it often, and can’t afford to buy it, then lease it.

 

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Backhoe Financing

The first thing to do is to clearly understand the difference between a backhoe and an excavator and determine which one best suits your business need.

If you have determined that a backhoe is the right fit for your need, then you need to determine all the accessories you need to get along with it.

If you have done these two steps, then you are at a point to focus on financing.

The next logical step would be to figure out if you’ll be able to make the monthly payments of owning a backhoe. 

Each type of financing will have a different monthly payment schedule. If you’re just barely making ends meet, you might not be able to afford financing a backhoe.

On the other hand, if you know that upcoming projects will drastically improve your monthly income, then it might still be a viable option to seek out backhoe leasing or financing.

 

 

Backhoe Leasing

 

Backhoe leasing tends to be a very popular option, because it sits somewhere in the middle between “buying outright” and “renting.”  

You don’t need to have a ton of cash on hand to just buy it, and you might also have a little more money to where you don’t have to rent it “just when you need it.”

Depending on how you structure your deal, backhoe leasing allows you to keep your heavy equipment at the end, which you can then continue to use for years, or resell when you’re done in order to get a different (or sometimes better) backhoe or other type of heavy equipment.

Leasing however is highly variable in that your business financials will play a huge part in how affordable or expensive the leasing will be. 

Generally, you’ll want as high of a credit score as possible and have been in business for a couple of years.

In general, if you have been in business for a few years and have good credit, you may not need to make any down payments upfront when you are leasing a backhoe.

If one of those isn’t in great shape, then you’ll probably be expected to pay higher monthly payments or make a larger down payment.

But it’s still an option. 

If you know what you can afford to spend every month on a backhoe than you can back into how expensive of a backhoe you can afford to buy for your business. Here's a handy equipment lease calculator. 

 

At the end of the day, getting a backhoe, no matter how you finance it, can be the difference between being able to accept a higher paying construction job.

 

Call 866-458-4777 to discuss if it's better to buy, rent, or lease a backhoe. 

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