Buy-Lease-Rent Financing status: You better sit down for this

By Garry Bartecki At this time in our economic lives this topic has a lot of pros and cons to consider before deciding what dealers need to do, what customers want to do and how dealers need to assist customers meet their goals using proper financial options. When we consider the three variables involved (buy-rent-lease)…. the pandemic equipment pricing for both new and used equipment…..interest rates along with new bank loan agreements and covenants……the inability of customers to handle the monthly nut now required if a unit is purchased or part of a long-term rental program. And then there is the collateral risk associated with lease residuals as well as book values four or five years out where the book value or residual will not even be close to reasonable once the new and used markets get back to a “normal” status where new unit pricing has decreased and there is adequate supply of used units available causing used sales to return to a “normal” as some percentage of recent new unit cost. Let’s face it folks, someone must pay for these crazy new and used costs and still make a buck doing it. Check out the auto industry to see how this is working out for them. There are dealers taking new and used cars to auction to try to get rid of them, and they are not hitting the reserves to make a deal. Banks are doing the same thing with repos. READ FULL ARTICLE >>