Equipment finance leaders urge collaboration as uncertainty persists

Facing excess inventory, elevated equipment prices and tightening credit, leaders in the equipment finance industry say collaboration among dealers, lenders and OEMs is key to finding stability amid economic uncertainty. 

As dealer and finance operations expand nationwide, lenders must collaborate with trusted dealers to inspect and deliver quality equipment that meets customer needs, Jody Ray, vice president and relationship manager at BMO Bank North America, said during Equipment Finance News’ webinar today. 

“That collaboration piece is crucial and critical,” he said. “In my world, we trust our dealers and we depend on them, almost solely, to be the eyes and ears, sometimes, of the lending team and the asset management team.”

Watch the webinar here

Dealers are the critical link between lenders and customers, providing visibility into real-world equipment conditions that influence credit and valuation decisions that would otherwise need third-party assistance for equipment monitoring, John Gougeon, president and chief executive of UniFi Equipment Finance, said during EFN’s High-priced used equipment inventory: The no-man’s land of equipment finance webinar. 

“Nothing beats having eyes on the equipment,” he said. “We have some internal hurdles that may be deal size, cost of equipment or age of equipment that require us to seek third-party support or an inspection.” 

Lenders, in turn, are rethinking financing structures, using flexible floorplans and tailored repayment schedules to protect dealer liquidity and accelerate inventory turnover. 

“At the same time, we also have to look at the retail side of that when they sell the piece of equipment, and we’re looking at the customer of the dealership’s ability to purchase the piece of equipment,” he said. “As the lender, we’ll need to make sure that we’re on top of every piece of the transaction, so that we can make that a smooth and seamless transaction for our customer, the dealer and their customer purchasing the equipment.” 

Excess inventory collaborations 

Collaboration can also enable dealers, lenders and OEMs to address excess inventory, especially with strategic programs, Kevin Pate, director of fleet and heavy-duty equipment at Shoppa’s Material Handling, said during the webinar. More than 70% of ag equipment dealers and nearly 30% of truck dealers reported excess late-model inventory in the second quarter, according to IronAdvisor Insights. 

The collaboration “would be something in the vein of a shared remarketing program, whether it’s a joint site where dealers that work with that vendor are able to load their assets, maybe not just what’s with that company,” he said. “You’d be looking for OEM-supported programs, similar to a certified pre-owned program, where they come with finance options, extended warranty options and things like that.” 

Check out our exclusive industry data here.