By the Loan Phone team Reviewed by Anthony Moncada, M.App.Fin, Cert IV Finance & Mortgage Broking
An excavator loan provides construction businesses with financing options for earthmoving equipment, allowing you to acquire essential machinery without large upfront capital. In Australia, rates typically range from 8-16% p.a. (indicative only), loan amounts from $30,000 to $1M+, with terms of 2-7 years depending on equipment age and business profile.
Modern platforms can provide fast online comparison, with settlements possible within 7-14 business days for straightforward applications. Most lenders require ABN registration, a minimum of 12 months trading history, and reasonable business financials, though specialist lenders may consider newer businesses. Potential tax benefits include depreciation deductions and GST credits on financed equipment (subject to individual circumstances).
| Business/Borrower Profile | Indicative Rate | Typical Term | Common Excavator Types |
|---|---|---|---|
| Established (3+ years, strong) | 8-12% p.a. | 3-7 years | Large tracked excavators |
| Standard (1-3 years) | 12-14% p.a. | 2-5 years | Mid-size excavators |
| Developing/Newer | 14-16%+ p.a. | 2-4 years | Compact excavators, used |
Rates are indicative examples only. Actual rates depend on individual circumstances and lender assessment.
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What are Excavator Loans?
Excavator loans are specialized financing products for construction businesses seeking to purchase earthmoving equipment. These loans are secured by the excavator itself, which typically results in more favorable interest rates than unsecured loans. This allows businesses to acquire critical machinery—from mini excavators to large 20+ tonne models—by spreading the cost over the equipment’s useful life, thereby preserving working capital.
Types of Excavator Finance Available
- Chattel Mortgage: The most common choice for construction businesses. You take immediate ownership of the excavator, and the lender takes a mortgage over it as security. This allows you to claim depreciation and other tax benefits from day one.
- Finance Lease: The lender owns the excavator and leases it to you for a fixed term. This structure is ideal for businesses that plan to upgrade their equipment regularly, as it provides flexibility at the end of the term to purchase, return, or extend the lease.
- Hire Purchase: Ownership of the excavator transfers to your business after the final payment is made. This offers a clear path to ownership with the certainty of fixed repayments.
- Operating Lease: A short-term rental agreement for using an excavator for a specific project without any intention to purchase it.
Eligibility Requirements for Excavator Loans
While criteria vary, most lenders require:
- Active ABN: Your construction business must be registered and operating in Australia.
- Trading History: A minimum of 12-24 months is preferred by most traditional lenders.
- Financial Standing: A history of positive cash flow and a good credit record for the business and its directors.
- Industry Compliance: You may need to provide current construction industry licenses, safety compliance documents, and evidence of public liability insurance.
Excavator Loan Application Process
- Identify Needs & Get Quotes: Finalize the excavator and attachments you need and obtain detailed quotes.
- Compare Finance Options: Use a comparison platform to evaluate offers from multiple lenders, including those who specialize in construction finance.
- Complete Application: Submit an online application with your business details, financials, and equipment quotes.
- Lender Assessment: The lender reviews your application. For complex or high-value equipment, this can take 7-14 business days.
- Approval & Settlement: Once approved, sign the final documents, and the lender will pay the supplier directly.
Excavator Loan Rates & Fees
- Interest Rates: Indicative rates range from 8-12% p.a. for established construction businesses to 14-16%+ p.a. for newer businesses or those with a more complex credit history.
- Fees: Expect an establishment fee (typically $500 - $2,000 for excavator loans) and potentially a valuation fee for used or specialized equipment.
Tax Benefits of Excavator Financing
Financing an excavator can offer significant tax advantages for your construction business:
- Depreciation: If you own the asset (e.g., via a chattel mortgage), you can claim depreciation. This may include eligibility for the Instant Asset Write-Off scheme, depending on current government policy.
- GST Credits: GST-registered businesses can typically claim the GST paid on the excavator’s purchase price as an Input Tax Credit.
- Interest Deductibility: The interest paid on the loan is generally a tax-deductible business expense. Important: Always consult your accountant for advice tailored to your specific business structure.
Choosing the Right Excavator Finance Option
The best structure depends on your operational needs:
- For Long-Term Ownership: A chattel mortgage is ideal for core equipment you plan to use for many years.
- For Short-Term Projects: An operating lease is perfect for hiring an excavator for a specific contract without the commitment of ownership.
- For Technology Upgrades: A finance lease provides the flexibility to upgrade to newer models as technology evolves.
Frequently Asked Questions
What is the minimum amount I can borrow for excavator finance? Most lenders have a minimum loan amount of around $30,000 for specialized excavator finance, reflecting the high value of this type of equipment.
How long can I finance an excavator for? Loan terms typically range from 2 to 7 years. The term is generally aligned with the excavator’s expected useful life, with longer terms available for larger, more durable machines.
Can I finance used excavators? Yes, financing for used excavators is common. However, lenders will typically have age limits (often 5-7 years) and may require an independent valuation. You might also be asked for a larger deposit.
What documentation do I need for an excavator loan application? You will generally need your ABN and business registration details, recent financial statements or bank statements, a quote for the excavator, and any relevant construction industry licenses or certifications.
Can I get excavator finance if I have a bad credit history? It is possible, especially through specialist lenders who focus on the construction industry. They will look at factors like your business’s cash flow and any secured contracts you have. The loan is secured by the excavator itself, which reduces the lender’s risk.
Speak with Specialists
Need expert guidance on your excavator loan application?
Email: loans@loanphone.com.au Website: www.loanphone.com.au
Related Resources
Explore these related guides for construction and equipment financing:
Disclaimer: This article provides general information only and should not be relied upon as financial or tax advice. Rates, terms, and eligibility vary by lender and individual circumstances. Tax benefits are subject to your specific business structure and circumstances. Always seek independent professional advice from a qualified accountant and financial adviser before making financing decisions.
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Last updated: October 17, 2025