Can You Finance a Used Skid Steer With Bad Credit?
Yes, you can finance a used skid steer with bad credit in Canada. Skid steers are among the easiest machines to finance at any credit level because of their lower price point, strong resale value, and broad market demand. Expect 15-25% down, interest rates of 10-18% depending on your score, and terms of three to five years through private or specialized equipment lenders.
Your credit is not great. Maybe you went through a divorce that trashed your score. Maybe a slow year meant some late payments that are still dragging you down. Or maybe you are newer to credit and just do not have much history built up yet. Whatever the reason, you need a skid steer and you are wondering whether anyone is going to say yes.
The short answer is yes. Used skid steers are actually one of the easier pieces of equipment to finance with bad credit, and there are specific reasons for that. This guide explains why, lays out your realistic options by credit tier, and gives you concrete strategies to get the best deal your situation allows.
Why Skid Steers Are Easier to Finance With Bad Credit
Not all equipment is created equal in a lender's eyes. When you have bad credit, the lender is focused on one thing: if you stop paying, can they get their money back? Skid steers check several boxes that make lenders more comfortable.
Lower dollar amounts. A used skid steer might run $25,000 to $50,000. Compare that to a $150,000 excavator or a $300,000 dozer. The lender's exposure is much smaller, so the risk of a significant loss is lower. This makes lenders more willing to work with borrowers who have credit challenges.
Strong resale market. Used Bobcat S650s, Cat 262s, John Deere 320Gs, and other popular skid steers sell quickly. There is always a contractor, landscaper, or farmer looking for a used skid steer. Lenders know that if they have to repossess the machine, they can sell it without sitting on it for months.
High demand. Skid steers are used in construction, landscaping, agriculture, snow removal, and light demolition. The broad demand means there is always a buyer, which protects the lender's collateral value.
Versatility supports repayment. A skid steer with the right attachments can generate revenue in multiple ways. Grading today, loading material tomorrow, pushing snow in winter. Lenders understand that a skid steer is not a single-purpose machine, which means the borrower has more ways to earn the money to make payments.
Key takeaway: Skid steers are among the most financeable machines at any credit level. The combination of lower price, strong resale, and versatile use makes lenders more willing to say yes even when your credit is not perfect.
Realistic Options by Credit Tier
Let us be specific about what to expect at different credit levels. These ranges reflect what we see in the Canadian equipment financing market.
| Credit Score | Approval Odds | Expected Rate | Down Payment | Typical Term | Best Lender Type |
|---|---|---|---|---|---|
| 600-649 | Good | 10-13% | 10-15% | 4-5 years | Equipment finance companies |
| 550-599 | Moderate | 13-16% | 15-20% | 3-4 years | Specialized equipment lenders |
| 500-549 | Possible | 15-18% | 20-25% | 3-4 years | Private lenders |
| Below 500 | Difficult | 16-20%+ | 25%+ | 2-3 years | Private lenders, rent-to-own |
600 to 649 — Bruised but workable. You are not in prime territory, but you have options. Several equipment finance companies work comfortably in this range. You will pay a higher rate than someone with a 720 score, but the terms are still reasonable. A $40,000 used Bobcat S650 at 12% over 4 years with 15% down ($6,000) comes out to roughly $896 per month. That is manageable for most operations.
550 to 599 — Challenged credit. This is where mainstream lenders start to thin out, but specialized equipment lenders still play here. You will need a meaningful down payment to show the lender you have skin in the game. Revenue matters a lot at this level — if your bank statements show consistent income, lenders are more flexible on the credit score. For a deeper look at credit scores and equipment financing, check out our credit score guide.
500 to 549 — Tough but not impossible. You are in private lender territory. These lenders charge more because they take on more risk, but they exist specifically for situations like this. A strong down payment (20-25%), proof of revenue, and a machine with good resale value (think Bobcat, Cat, or John Deere under 5,000 hours) can get you approved. Check our skid steer pricing guide to understand what machines in that range cost, and our hours guide to know what hour counts lenders are comfortable with.
Below 500 — Very challenging. At this level, most traditional equipment financing is off the table. Your options include private lenders with large down payments, rent-to-own programs, or getting a co-signer with better credit. Some contractors at this level save up and pay cash for an older, cheaper skid steer while they rebuild their credit, then finance a better machine in a year or two.
What the Monthly Payment Actually Looks Like
Let us run the real numbers on a $35,000 used skid steer — say a 2021 Bobcat S650 with 2,500 hours — at different credit tiers.
| Scenario | Down Payment | Amount Financed | Rate | Term | Monthly Payment | Total Interest Paid |
|---|---|---|---|---|---|---|
| Good credit (680) | $3,500 (10%) | $31,500 | 8% | 5 years | $639 | $6,840 |
| Fair credit (620) | $5,250 (15%) | $29,750 | 12% | 4 years | $783 | $7,734 |
| Bad credit (560) | $7,000 (20%) | $28,000 | 15% | 4 years | $780 | $9,440 |
| Very bad credit (500) | $8,750 (25%) | $26,250 | 18% | 3 years | $949 | $7,914 |
A few things stand out. First, even with bad credit, the monthly payment on a skid steer is often under $1,000. That is achievable for most working contractors. Second, the higher rate hurts, but the shorter term limits how much total interest you pay. Third, the larger down payment at lower credit tiers actually keeps the monthly payment reasonable by reducing the financed amount.
Strategies to Get Approved With Bad Credit
Here are specific, practical strategies that help contractors with bad credit get approved for skid steer financing.
Put more money down. This is the single most effective thing you can do. Every dollar of down payment reduces the lender's risk and shows you are committed to the deal. If you can scrape together 20-25% down, your chances of approval go up dramatically, and your rate may drop a point or two as well.
Choose the right machine. Lenders evaluate the machine as collateral, not just your credit. A well-known brand (Bobcat, Cat, John Deere, Kubota, Case) with reasonable hours and good condition is easier to finance than an off-brand machine or one with high hours. Stick to machines under 5,000 hours from a major manufacturer and you are making the lender's job easier.
Show strong revenue. Bank statements matter. If your business is depositing $15,000 to $25,000 per month consistently, that goes a long way toward convincing a lender that you can handle a $700 to $900 monthly payment, even if your credit score says otherwise. Some lenders will override a low credit score for borrowers with strong, consistent revenue.
Buy from a dealer. Dealers often have relationships with multiple lenders, including ones that specialize in challenged credit. A dealer may have access to financing options you would not find on your own. Plus, buying from a dealer simplifies the process because the lender already trusts the machine's condition and value.
Get a co-signer. If you have a business partner, spouse, or family member with better credit who is willing to co-sign, this can open doors to better rates and terms. The co-signer is on the hook if you do not pay, so make sure everyone understands the commitment.
Start with a smaller deal. If you cannot get approved for the machine you really want, consider starting with a less expensive skid steer — something in the $15,000 to $25,000 range. Make payments on time for 12 months, build your credit, and then refinance or trade up to the machine you need. Think of it as a stepping stone.
💡Key takeaway: Bad credit does not mean no options. It means you need a strategy. More down payment, the right machine, strong revenue, and the right lender can all work in your favour.
Lender Types and How They Handle Bad Credit
Understanding who lends to bad credit borrowers helps you target your applications correctly.
Banks and credit unions. Most want credit scores above 650 for equipment loans. If your score is below that, do not waste your time applying at the bank. You will get declined and it adds a hard inquiry to your credit report.
Captive finance companies (Bobcat Financial, Cat Financial, John Deere Financial). These are the financing arms of the equipment manufacturers. They are more flexible than banks because they know the equipment, but they still have credit thresholds. Some have programs for scores in the 580-620 range, but below that they typically pass.
Independent equipment finance companies. This is your sweet spot for bad credit skid steer financing. Companies that specialize in equipment lending often have more flexible underwriting because they understand the collateral. They look at the full picture — your credit, your revenue, the machine, your industry experience — not just a credit score.
Private lenders. These are individuals or small firms that lend their own capital. They charge the highest rates (15-20%+), but they are the most flexible on credit. If you have a solid down payment and can show that the skid steer will generate revenue, a private lender will often say yes when everyone else says no.
Rent-to-own. Some dealers and equipment companies offer rent-to-own programs where you rent the machine with an option to purchase at the end. Monthly payments are higher than traditional financing, but there is often no credit check. This can be a last-resort option if you truly cannot get financed elsewhere.
How to Avoid Common Mistakes
Contractors with bad credit often make mistakes in the financing process that cost them money or lead to unnecessary denials. Here are the most common ones.
Applying everywhere at once. Every application triggers a hard credit inquiry, which can drop your score by 2-5 points per inquiry. If you apply at 8 different places in a week, you could knock your score down 15 to 30 points. Instead, target 2 to 3 lenders that you know work with your credit tier, and apply to those. Working with a broker like IronFinance means one application goes to multiple lenders without multiple hard pulls.
Ignoring your credit report. Before you apply, pull your free credit report and check for errors. Accounts that are not yours, debts that have been paid but still show as outstanding, or incorrect late payment records can all drag your score down. Disputing errors and getting them removed can boost your score meaningfully.
Choosing the wrong machine. Falling in love with a machine that does not make financial sense is easy. That 2014 Bobcat S750 with 7,000 hours and no records might be cheap, but if the lender will not finance it because of the hours and condition, you have wasted time. Choose a machine that a lender can get comfortable with — newer model, reasonable hours, major brand.
Not having your documents ready. When a lender is on the fence because of your credit, being organized and responsive tips the scale in your favour. Have your bank statements, tax returns, business registration, and a quote for the machine ready to go. Delays kill deals, especially with lenders who are stretching on credit.
Skipping the down payment conversation. Some contractors with bad credit apply for 100% financing and get surprised when they are declined. Be realistic about down payment from the start. If you know your credit is under 600, plan on 15-20% down and communicate that to the lender upfront. It changes the conversation entirely.
Building Credit Through Equipment Financing
Here is the silver lining of financing a skid steer with bad credit: it can actually help you build your credit back up.
Equipment loans report to credit bureaus. Every on-time payment adds a positive mark to your credit file. After 12 to 18 months of consistent payments, most borrowers see a meaningful improvement in their credit score — often 30 to 50 points or more.
That improvement positions you for better rates when you need your next piece of equipment. The contractor who finances a $35,000 Bobcat at 15% today because their credit is rough can come back in two years with 24 on-time payments on their record and qualify for a $60,000 Cat 262 at 10%. That is a significant difference in your cost of operation over time.
Think of the first deal as an investment in your credit future, not just a machine purchase.
For a broader look at how down payments affect your financing options, our down payment guide covers strategies for putting together the cash you need.
Key takeaway: Financing a skid steer with bad credit is not just about getting the machine — it is about starting to rebuild your credit. Twelve months of on-time payments can move your score enough to change your entire financing picture on the next deal.
Sources: TrackCheck.ca, MachineryTrader. Prices verified March 2026.
Ready to See Your Options?
If your credit is not perfect and you need a skid steer, do not assume you cannot get financed. The combination of lower price points, strong resale values, and lenders who specialize in equipment means there is usually a path forward. Use our financeability checker to get a quick read on your deal before you apply.
You can apply with IronFinance to find out what you qualify for without affecting your credit. We work with lenders across the credit spectrum — from prime to private — and we will match you with the best option for your situation. If a deal is possible, we will find it. And if there are steps you can take to improve your position before applying, we will tell you that too. You can also review our complete skid steer financing guide for a broader overview of the process.
Frequently Asked Questions
What is the minimum credit score to finance a used skid steer?
There is no absolute minimum. Some private equipment lenders in Canada work with credit scores as low as 450-500, though you will need a larger down payment (20-25%) and will pay higher interest rates (14-18%). Most mainstream equipment lenders want a score of at least 580-600. The skid steer itself helps because the lower dollar amount and strong resale value reduce the lender's risk.
How much down payment do I need for a skid steer with bad credit?
Plan on 15-25% down if your credit score is below 600. For a $40,000 used skid steer, that means $6,000 to $10,000 upfront. The more you put down, the better your chances of approval and the lower your interest rate will be. Some lenders may accept 10-15% down if you have strong revenue and time in business despite the low credit score.
Will financing a skid steer with bad credit improve my credit score?
Yes, if you make payments on time. An equipment loan reports to business and personal credit bureaus, and consistent on-time payments build your credit history. After 12-18 months of on-time payments on a skid steer loan, many contractors see their credit score improve by 30-50 points, which positions them for better rates on future equipment purchases.
Ready to see what you qualify for?