Equipment dealers and lenders are exposed to greater risk as economic pressure rises, prompting a greater need for collaboration to close deals and avoid bad ones.
Charge-offs in the equipment finance industry rose in March to their highest level since September 2020, and 30-plus-day delinquencies jumped 25 basis points to 2.3%, both hinting that tariffs are starting to cause financial stress, according to the Equipment Leasing and Finance Association.
Prompt communication with dealers can help lenders reduce delinquencies and can help dealers maintain customers, Josh Arnall, finance and insurance (F&I) manager at Hopkinsville, Ky.-based H&R Agri-Power, said in a panel discussion last week at Equipment Finance Connect 2025 in Nashville, Tenn.
“I want all of my lender partners to let me know when somebody is 30, 45 days past due and they’re not communicating,” he said. “Because guess what, it behooves me to communicate with that customer.”
Once past-dues are communicated to dealers, they are better positioned to support their lender partners, whether it’s reminding customers to make their payments or arranging a call with the lender to discuss their financial situation, Arnall said.
“My philosophy is we have to try to preserve our customer base,” he said, noting that this may require more risks amid economic turbulence. “We’re taking some risk in order to try to help them stay in business. … It depends on the customer, of course, but we’re all in this together.”
Communicating with dealerships’ sales teams also helps lenders to understand borrowers’ financial challenges and creditworthiness, Stephen Anderson, director of originations at Chicago-based BMO Commercial Bank, said during the discussion.
“If you’re an independent finance company and calling on dealers, looking for opportunities to finance, what does the sales team say?” he said. “What are the customers’ limitations? What’s holding them back from being able to make that loan? And if they need an extension or any type of modification, let’s talk about if it makes common sense and it’s reasonable.”
Arnall agreed, saying F&I managers must work closely with sales departments to boost efficiency during economic hardship.
“In a market like this, the F&I team works twice as hard to get half as much done,” he said. “So, we’ve got to communicate with the sales team because they’re boots on the ground.”
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