Lenders continue to see good times for used equipment loans

Me Photo Headshot
Updated Aug 27, 2019

Editor’s Note: This is part two of our 2019 Used Equipment Report. To read part one, click here.

Equip Report0819 Two Lead
Lenders are seeing another busy year in financing used construction equipment, with loan applications and approvals keeping pace with 2018.

“Both years have been very good, both for contractors and the industry in general,” says Steven Nenn, regional sales manager, Central Region of the Construction Group of Wells Fargo Equipment Finance. “When the industry is strong that trickles into the used equipment market as well.”

Backlogs on new equipment, which played a role in last year’s used equipment market, continue to help drive demand in 2019, Nenn says. “It’s still a pretty long wait. I haven’t seen it come down yet.”

Those good times extend to borrowers making timely payments on their loans. “The default rate is almost immeasurable,” Nenn says. “These are very good times.”

Rich Fikis, president of Komatsu Financial, reports a steady flow of used equipment loans driven by the company’s equipment remarketing group. “They’ve seen a slight uptick in sales year over year, and that tends to trickle down into our portfolio,” he says.

Leasing used equipment still remains uncommon; however, Fikis has seen a slight increase in 2019. “It’s still not typical, but it’s a little more frequent than in years past.” He attributes this to contractors focusing more on total cost of ownership and allocating their fleet to specific jobs. Komatsu is willing to write leases for its K Care Certified used equipment, which has met strict maintenance requirements and inspections.

Aaron Wetzel, John Deere senior vice president of global sales and marketing, says the company expects the trend of increased used equipment sales and financing to continue.

“Looking ahead, we are already seeing some industry trends that are impacting the broader equipment category,” he says. “For example, contractor backlogs are extending out six months, and there is a demand for both new and used construction equipment driven by trends, including infrastructure, oil and gas.”