By Ben Thorpe – Equipment World
Though financing remains a popular option, cash is king for contractors currently looking to purchase new construction equipment.
A recent website visitor poll from Equipment World found cash to be the most popular purchase method, with 43% of 1,075 respondents saying it’s how they typically pay for new equipment. Financing followed at 31%, and “other” at 8%. This survey was conducted from May 22 to June 18.
No other answer for the poll was chosen by more than 5% of respondents, including purchase option lease (5%), rental purchase option (5%) and lease-to-own (3%). Seasonal lease was the least popular payment method, typically used by only 2% of respondents.
- Buy with cash: (43%)
- Finance: (31%)
- Other: (8%)
- Purchase option lease: (5%)
- Rental purchase option: (5%)
- Lease-to-own: (3%)
- Rent-to-own: (3%)
- Seasonal lease: (2%)
More contractors are turning toward cash purchases to get around high interest rates, said John Ryneska, director of OEM & strategic initiatives at Trader Interactive, in a March Equipment World report.
“Buyers have already pivoted toward cash transactions, and it’s not even just tied to that personal consumer buying a $30,000 skid steer, for instance,” he said. “It’s also for some of these government-run programs where cash is paying for quarter-million-dollar loaders, versus financing.”
And if buyers aren’t willingly paying with cash, it’s likely because they’ve run out of options.
“They’re getting rejected by banks because they don’t have impeccable credit. So, if that purchaser has the cash flow, they’re making it happen. Otherwise, it’s just lengthening the purchase cycle,” said Ryneska.
Dealers Need Backup Financing Plans
These poll results don’t match what Chris Wackman, president of 13-store Kubota and New Holland dealership WCTractor, is seeing in Southeast Texas. Through some strong financing subsidies from Kubota, he’s seeing an 80% take rate from contractors.