Ok, you have this nagging feeling that maybe things aren’t all that rosy with your equipment financing partner. Sales have been soft the last two years across the board, but still, something isn’t right. You just know it. And it’s starting to affect your bottom line, so something needs to be done.
Here are a few warning signs that your equipment financing partner might need a review (and even replacing.)
- Approvals are markedly down, even on seemingly good customers – In the current economy, I would expect any equipment financing company to raise lending standards to a degree. So approvals are expected to drop somewhat. But if you start seeing denials to customers you know are good, solid customers that can certainly make the equipment leasing payments… well, there may be something to that. Your equipment financing partner may have made criteria a little too tight.
- Rates have risen past the norm – Many equipment financing companies have raised their rates – that’s no surprise. But some have gone above what would be considered normal. Shop around – see what equipment leasing companies are charging, and see if it’s markedly different from your partner’s rates.
- Lease Terms aren’t as customer-friendly – Equipment leases are supposed to be an advantage for the lessee (as well as profitable for the leasing company.) But some equipment leasing companies are getting cute with residual values and lease conditions, making it harder for customers to qualify for a lease, or even lessening the desire to lease in the first place.
These three circumstances aren’t really all that surprising – they’re almost no-brainers. One way to see what is going on is to talk to your customers – if they are complaining about the lease terms, that they got turned down for equipment financing and don’t know why, etc etc, that should tell you something is amiss.
And like I mentioned in my last post – not all equipment financing companies are created equal. If you think things aren’t what they should be, trust me, there’s someone else out there who can do a better job.