Equipment dealers and lenders are joining forces to offload older inventory that still has plenty of life left in the tank.
Equipment manufactured pre-pandemic has challenged dealers in recent years as they take losses due to steady depreciation while OEMs oversupply them with new equipment. Asking values for used heavy-duty construction equipment fell 6.4% year over year in January while auction values fell 7.4% YoY, according to Sandhills Global.
Bringing transparency to the used-equipment market, however, can help customers find value in older gear and obtain financing, Matt Manero, president of Carrollton, Texas-based Commercial Fleet Financing, said during the Feb. 11 Equipment Finance News webinar “Dealers and Lenders: Solving Shared Challenges.”
“If you have a startup owner-operator who wants to get into the trucking business, and they want to buy a $20,000 truck with 1 million miles on it, we’re going to consult them not to do that,” Manero said. “But conversely… a 15-year-old heavy-duty tow truck has lots of life left in it. And if that customer knows where it comes from, and they’re buying it from someone [they trust], they’ve seen the maintenance records and they think it’s the right piece for their fleet, we want to support that customer and do it.”
Asking and auction values for used heavy-duty trucks fell 7.9% YoY and 7% YoY, respectively, last month, although used-truck prices appear to be bottoming out.
Businesses should feel confident that 5- to 10-year-old equipment, while considered older to some, will last well beyond the terms of a loan, Kit West, business development director at Wheatland, Wyo.-based C.H. Brown, said during the webinar.
“If it’s a 60-month term, they should be able to make good money with it, be able to know their expenses and know their profit margins,” he said.
The age and condition of equipment are important factors to consider, but many lenders place more value on the financial stability of the applicant, Brown said.
Setting stage for repeat sales
While decreased used-equipment values may yield unfavorable results in the current market, selling to creditworthy customers while working with “the right lender that understands the situation” can generate repeat sales, John Boy, finance and sales administration manager at Bridgeville, Pa.-based Anderson Equipment Co., said during the webinar.
“When you do finance these one-off used transactions, it’s opening the door for that customer to come back to that lender as well and say, ‘Hey, this guy went out on the ledge, gave us a shot at this piece of used equipment,’” he said.
Working with a wide range of lenders that specialize in certain areas can help dealers close deals that vary in both ticket size and type of equipment, Boy said.
“It’s almost like building your own portfolio as a dealership of lenders to work with,” he said.
The third annual Equipment Finance Connect at the JW Marriott Nashville on May 14-15, 2025, is the only event for both equipment dealers and finance providers. Learn more and register here.
