What makes ag equipment lenders unique is that they serve as partners to both the buyer and the seller. Lenders offer terms that help the dealership sell, and help the customer find the right financing options to purchase the machinery and equipment they need.DFS Finance is one such lender serving farmers nationwide for over 54 years. Brett Ehlers, Senior Vice President of Credit, has been with DFS Finance for 17 years building relationships with farmers and dealers. His role as senior credit officer is to oversee the credit department and manage the company’s risk portfolio. Ehlers, who grew up on a farm in West Central Nebraska, earned a finance and agribusiness degree from the University of Nebraska at Lincoln. “Our typical customer is a farm owner operator looking for competitive rates with flexible financing terms…someone that wants to be a partner with DFS Finance,” Ehlers said. The goal is to build a relationship with customers and help them be successful for many years to come.
Today’s farmers demand speed in loan approval and execution
“DFS Finance has made it their mission these last few years to make sure that our online experience for our customers and dealers is top-notch,” Ehlers said.” Technology is super important because when someone comes into that dealership to buy a piece of equipment, they want to secure their financing and haul that piece of equipment away. Having an online platform to do that is important.”
Interest rates affect buying decisions
“….maybe they decide to run that piece of equipment another year just to see what happens with interest rates.”
Ehlers noted that the increased price of farm equipment along with rising interest rates is a reason some farmers are not making large equipment purchases right now. Lenders are monitoring interest expense along with increased costs of inputs, such as seed, fuel and fertilizer. “They’re not trading equipment like they typically do,” he said. “Maybe those operators decide to run their piece of equipment another year just to see what happens with interest rates.”
When farmers are ready to trade equipment, valuing that piece of equipment correctly is imperative. That’s where IronGuides comes into play.
“Valuing a piece of equipment is as important to us as how a customer pays. You have all the details in the world between credit reports and financial information where you can become pretty confident in the credit side of your decision. The collateral part of your decision is the hard part, he said. ”That’s when we rely on IronGuides.”
“We use IronGuidesbecause those options can affect the value quite drastically.”
Ehlers said DFS Finance uses IronGuides to estimate ag equipment values obtaining region-specific valuations with adjustments for options and hours, including historical values.
“We use IronGuides to value our equipment because we realize that options affect the value quite drastically.That’s one of the benefits we see with IronGuides is that we’re able to locate the options and really drill down to what the collateral value is on that piece of equipment we’re making a loan against.”Equipment values can also vary geographically so the region option in Iron Guides is extremely helpful, Ehlers noted.
IronGuides serial number validation is essential to confirm the model year of the equipment.
IronGuides also contains serial number information, helpful to both lenders and dealers.“The serial number information is useful for us when we’re trying to validate the model year,” Ehlers said. “When we are financing a piece of equipment that is aged we want to make sure we are accurate with the model year, so going back to the IronGuides serial number validation can really help.”
IronGuides valuation affects down payment amount.
Valuations can affect the customer’s loan and the amount of down payment required against the loan. “If we feel like maybe the value of the equipment just isn’t there, we may require a larger down payment or vice versa if we feel like the value of the equipment according to IronGuides is quite high, maybe we wouldn’t require as large of a down payment,” he said.“Consistency in equipment valuations is also extremely important. As we all know the farm economy is volatile and equipment prices can change in the blink of an eye so staying consistent is important,” Ehlers said. “I would say what’s just as important is staying up to date and not getting old information, and old information could be as soon as last month.”
Lenders using IronGuides could mean an easier sale for the dealer
Ehlers encourages dealers to submit dealer reports since lenders rely on accurate information. “Lenders use your product. So, the more we know about a piece of equipment, the greater the chance that we’re going to be able to loan more money against that piece of equipment and that means a lower down payment for their customer which could mean an easier sale for the dealer,” Ehlers said.“No matter how you spin it, publications like yours are just super important.”
