Podcast: Interest rates separating asset financiers from balance sheet lenders

Global interest rate concerns will test the resolve of equipment financiers in 2025. 

With dealers right-sizing and reducing fleets to refine operations amid 2024 carryover, finance companies must also evaluate their contract positions, Declan North, global director of Material Processing trade Accounts Receivable and financial solutions for Terex, tells Equipment Finance News on this episode of “The Dig” podcast.  

“As 2024 results start seeping through into 2025 and the finance houses, it’ll really start seeing who’s really a true asset finance provider or who’s a balance sheet lender,” he says. “They’ll start looking at the debt equity levels, and can they have a sustainable repayment capacity, but the contracts aren’t changing. Profitability might have changed, but that will come back again.” 

Until the inventory and market start to right size, global interest rates represent a risk management concern for the equipment market, as customers and dealers look to reconcile current and historical interest rates, North says. 

“The U.S. is a bit of a flux as is the rest of the world at the moment because [of] interest rates,” he says. “We were expecting to see [rates] drop further than they have, but they still seem to be remaining constant, and that in some cases we’ve had a spike now.” 

Interest rate landscape

While interest rates remain volatile globally, lenders should watch the overall equipment market, including customer buying habits, for signs of a return to normal operating markets, North says. 

“As the market regularizes, so should interest rates, and you should start seeing that drop, which makes it back more into a standard operating market again,” he says. “They’re all the little things that you’ve seen, such as the buying habits of a customer and the dealer and how the dealer interacts with the customer.” 

Lenders committed to asset finance face an “exciting” landscape, with the industry still in flux right now, North says. 

“That’s what makes this so exciting, and what makes it so enjoyable,” he says. “There’s no two days that are the same and no two applications are the same. It’s fun.” 

Tune in to the newest episode of “The Dig” to hear from North about global operations, market trends, customer behavior, financing challenges, rising interest rates, technology in equipment finance and expectations for 2025. 

The third annual Equipment Finance Connect at the JW Marriott Nashville in Nashville, Tenn., on May 14-15, 2025, is the only event that brings together equipment dealers and lenders to share insights, attend discussions on crucial industry topics and network with peers. Learn more about the event and register here.