Equipment finance credit approvals hit 9-year high

Equipment finance originations increased for the third consecutive month in September while credit approvals hit a nine-year high, signaling positive momentum despite ongoing economic uncertainty.

New business volume in the industry totaled $10.5 billion in September, up 4% from August, according to the Equipment Leasing and Finance Association‘s (ELFA) CapEx Finance Index, released Oct. 24. New business volume was up 8.6% year over year last month, although down 1.8% YoY through September.

“Despite the government shutdown’s delay of key economic data, our latest CFI data indicates that equipment demand was strong at the end of the third quarter,” ELFA President and Chief Executive Leigh Lytle stated in the report. “The current pace of new business volumes has put the industry on track for one of its best years ever. With the Fed resuming its easing cycle, I expect demand to remain strong and financial conditions to improve further.”

Meanwhile, the average credit approval rate rose 50 basis points (bps) month over month to 79.2%, the highest it’s been since 2016. Captives saw the highest approval rate at 82.9%, followed by banks at 80% and independents at 70.5%.

The overall delinquency rate dipped 19 bps to 1.9%, and charge-offs fell 12 bps to 0.48%, according to the report.

Check out our exclusive industry data here.