How excavator finance works
Excavator finance is secured against the machine itself, whether it's a mini digger for residential jobs or a 30 tonne unit for civil work. Because a good digger holds its value, lenders treat it as solid security, and that keeps the rate sharper than an unsecured business loan.
Most excavators are funded through the business with a chattel mortgage or a finance lease. The right choice depends on your tax position, how long you'll keep the machine and whether you want a balloon at the end. If the digger is for your own property rather than a business, it can be funded with a personal loan instead.
Mini, midi or full size
The size of the machine changes how lenders look at the deal, so it's worth knowing where yours sits.
Mini excavators
Up to around 5 or 6 tonne. The most common first machine for an owner-operator, and the easiest to fund. The smallest can go on a tag trailer rather than a float.
Midi excavators
Roughly 6 to 10 tonne. Enough for bigger residential, pool and drainage work while still being easy to move between jobs.
Standard and large
12 tonne and up, into the 20 and 30 tonne class for civil and bulk earthworks. Lenders want to see the work to keep a bigger machine busy.
Who excavator finance suits
Owner-operators
Experienced operators buying their own digger to go out on their own or stop paying someone else's hire rates.
Plumbers and drainers
A mini or midi for trenching and drainage work, so jobs aren't held up waiting on a hire machine.
Pool and landscape builders
Compact diggers for digs, retaining walls and site prep on residential jobs.
Civil and demolition contractors
Larger machines for bulk earthworks, roads and demolition, often ex-fleet with known hours.
Hire businesses
Adding diggers to a dry hire fleet, where one facility can cover several machines.
Farmers and property owners
A small excavator for dams, fencing and drainage on the property. See agricultural finance for the rest of the farm gear.
New, ex-fleet, private or auction
New from a dealer
The simplest to fund. Lenders like new machines with a dealer invoice, and a manufacturer finance offer is always worth comparing against the panel.
Ex-fleet and used
Ex-hire machines with known hours are popular and fund well. Lenders look at age, hours and condition, so a service history helps.
Private sale and auction
Both can be financed. The lender confirms ownership and that nothing is owing on the machine. For auctions, get approved before you bid.
Typical terms
Common ranges, not promises. Every lender sets its own policy.
- Term: often three to seven years. Some lenders cap the machine's age or hours at the end of the loan, which can shorten the term on an older digger.
- Balloon: common on bigger machines to keep repayments down. Less common on minis, where the loan is small enough to pay off in full.
- Deposit: often not needed if the business is established. Worth having for a new ABN, an older machine or a private sale.
- Structure: chattel mortgage is the most common, with finance leases also available. Personal loans cover diggers bought for your own property.
- What goes in: buckets, attachments and the trailer or float to move the machine can usually be added to the same loan.
An example repayment
Illustrative only. At an example rate of 9.50% p.a. over five years, fees not included.
| Machine | Repayment | Total repaid |
|---|
| $45,000 1.7 tonne mini excavator, no balloon | $945 a month | $56,705 |
| $110,000 5.5 tonne midi excavator, no balloon | $2,310 a month | $138,612 |
| $240,000 22 tonne excavator, no balloon | $5,040 a month | $302,427 |
| $240,000 22 tonne excavator, $48,000 balloon | $4,412 a month | $312,741 |
On the 22 tonne machine, the balloon lowers the repayment by about $628 a month and adds about $10,300 in interest, with $48,000 due at the end. That can suit you if the machine will be traded in around then. If you plan to run it for years after, you will need to pay or refinance that lump sum.
These figures are illustrative only. They are not a quote, a current rate or an offer of credit. Your rate, fees and terms depend on the lender, the machine and your circumstances. Repayments are calculated in arrears and rounded.
What lenders look at
Your ABN and your experience
Lenders look at how long the ABN has been running and how long you've been operating machines. Ten years on the tools with a brand new ABN is a very different risk to a new business with no background.
Work lined up
Contracts or a steady pipeline of work give lenders confidence the repayments are covered, especially on bigger machines.
The machine
Make, age, hours and attachments. Mainstream brands with good resale are easiest to fund. Older machines may need a deposit or a shorter term.
Low doc options
If your financials are behind, many lenders will work from your ABN, BAS and bank statements instead.
Checking a used excavator before you buy
A used digger can be great value, but the expensive problems aren't always obvious. Get a mechanic to look it over if you can, and check these as a minimum.
Undercarriage
Tracks, rollers, idlers and sprockets are some of the costliest parts to replace. Worn or uneven undercarriage can wipe out the saving on a cheap machine.
Pins, bushes and the slew
Play in the boom, arm and bucket pins means wear that will need fixing. Movement or noise in the slew ring is worth a closer look.
Hydraulics
Look for leaking cylinders, weeping hoses and slow or jerky movement. Hydraulic repairs add up quickly.
Hours and paperwork
Hours should line up with the wear you can see and the service history. A PPSR search on the serial number shows whether money is still owed on the machine, and the lender will run one before settling.
Buy or keep hiring?
If you're hiring a digger most weeks, the repayment on your own machine can end up close to what you already pay in hire, and at the end of the loan you own something with resale value. If you only need one a few days a month, dry hire is often cheaper once you count insurance, servicing and transport. Add up a typical month of hire costs and compare it with an example repayment before you decide.
What to have ready
- Your ABN, business structure and whether you're registered for GST
- Your last few BAS and business bank statements
- Financials and tax returns for a full doc application
- A short summary of your operating experience and the work lined up
- A dealer quote, tax invoice or auction listing for the excavator
- The serial number, hours and service history on a used machine
- Details of any attachments and the trailer or float you want included
Excavator finance questions
Can I finance a used excavator?
Yes. Used and ex-hire diggers are funded every day. The lender looks at hours, age and condition, and some set a maximum age for the machine at the end of the loan.
How many hours is too many?
There's no single cut-off. Lenders weigh hours against the age, brand, condition and service history of the machine. A well kept machine with high hours can fund better than a neglected one with low hours.
Can a new business get excavator finance?
Often, yes. Lenders are more comfortable when you've got years on the tools, a deposit or work already booked. There are fewer lenders to choose from than for an established business, so comparing matters more.
Can I finance a mini excavator for my own property?
Yes. If it isn't for a business, it's done as a personal loan rather than a chattel mortgage, and the lender looks at your personal income instead of an ABN. See personal loans.
Can I include attachments and the trailer?
Usually. Buckets, hammers, augers, tilt hitches and the trailer or float bought with the machine can typically go into the same loan. See trailer finance if you're buying the float on its own.
Do I need a deposit?
Not always. An established business can often fund the full price of the machine. Putting money down helps if the ABN is new, the machine is older or it's a private sale.
Chattel mortgage or lease?
Either can work. A chattel mortgage means the business owns the excavator from day one, while a lease can suit a different tax setup. Our guide to chattel mortgage, hire purchase, lease or rental compares the options, and your accountant can confirm the tax side.
Can I claim the GST?
If the business is registered for GST and buys the excavator with a chattel mortgage, it can generally claim the GST on the purchase price in its next BAS. Check with your accountant.
Can I finance a machine from interstate?
Yes. The lender needs the invoice or sale details, and for a private sale, proof of ownership and that nothing is owing. Sort out transport and insurance before the machine is moved.
Building out a fleet? See yellow goods finance for loaders, dozers and skid steers, or equipment finance for everything else.
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