In today’s competitive equipment financing landscape, many lenders fall into the trap of competing solely on rates and terms.

While competitive pricing remains important, forward-thinking equipment finance companies are discovering that prioritizing client success leads to stronger portfolios, better retention and sustainable growth. This shift from transaction-focused lending to outcome-based financing represents a fundamental change in how equipment finance providers can create lasting value.

The Limitations of Rate-Centric Lending

Traditional equipment financing often follows a familiar pattern: a client requests funding for specific equipment, lenders compete on rates and terms and the lowest bidder typically wins the business. While straightforward, this approach overlooks crucial factors that determine both the client’s success and the lender’s long-term profitability.

Consider a developer seeking financing for new construction equipment. A rate-focused approach might secure the deal, but fail to address critical questions, such as: Will this equipment truly solve the client’s business challenges? Is the timing right for this investment? Are there alternative solutions that might work better?

By adopting a more comprehensive approach, equipment lenders become true partners in supporting the client’s business objectives rather than simply facilitating equipment purchases.

Putting the Client First

So how can you adopt a more thoughtful model of client-centric lending? Start with data-gathering on the client and their business, their industry, their challenges, their opportunities and their risks. Then leverage those insights to structure a financing package that takes their unique needs into account.

At First Citizens Equipment Finance, we’ve found this client-centric model is extremely successful in building long-term relationships that pay off for the bank and the client alike. It is absolutely superior to a transaction-focused approach. When you structure financing with the client’s ultimate success in mind, you help ensure they’ll not only repay their loan or lease, but also be operating, growing and doing business with you for years to come.

Here’s an example that helps illustrate the point.

A mid-sized contractor was looking to lease additional construction equipment as they had just won two bids: one with a municipality and the another to assist in constructing a multi-home subdivision. Through our discovery process, we helped the contractor and their dealer identify the right financing vehicle to help maximize the contractor’s return on investment.

That return was substantially increased by leasing the equipment at a lower monthly payment compared to loan financing or acquiring the equipment for cash. The financing enabled the contractor to both increase its ROI by over 20%, while also reducing its operating cost as the lease also contained a dealer/OEM furnished warranty plan.

Leveraging Experience

At First Citizens Equipment Finance, we’ve found that deep industry knowledge and real financing expertise are critical to the process. Unless your team is thoroughly familiar with the industry sectors in which you operate, they can’t truly understand how to tailor the financing package to best support the clients’ business needs.

Having been in the equipment finance business for decades, we have extensive experience in showing clients the value of lending and leasing in helping preserve their own capital, reduce cost of ownership and avoid depreciation costs on heavy equipment. Our experience also contributes to speed of execution and flexibility in structuring to meet client needs.

We are efficient through all steps of the equipment financing process including quoting a client, receiving documents, delivering a credit decision, returning documents and funding the deal. In addition, we are constantly evaluating the products and services we offer, including the financing that we provide, to ensure that we are delivering the best solutions to our customers.

There’s a saying that you get what you measure. To implement a more client-centric approach in your own shop, you might establish new metrics that go beyond financial returns.

Tracking repeat business and client retention rates, for example, might help show the added value that comes from pursuing sustainable relationships. Client referrals and client satisfaction surveys can also help uncover the benefits of putting the client first. Taken together, metrics like these can provide a more complete picture of the lender’s impact on client success.

The Future of Equipment Finance

The ability to deliver value beyond competitive rates will differentiate successful lenders. The shift from rate-centric to client-centric financing requires investment in people, processes, and technology. However, the returns – in the form of stronger client relationships, better portfolio performance, and sustainable competitive advantage – make this investment worthwhile.

Equipment finance providers who embrace this transformation will find themselves better positioned to navigate industry changes, economic cycles and evolving client needs. The future belongs to those who can move beyond the rate sheet to become true partners in their clients’ success.

Harold Ray leads financing in the construction equipment market sector for First Citizens Bank’s Equipment Finance group. His responsibilities include overseeing a nationwide team of lending and leasing specialists.

Ray has more than 30 years of experience in equipment finance, having joined the Equipment Finance division at the former CIT Group in 1992. Over the course of three decades, he has risen through the ranks to lead one of the largest and fastest-growing segments of First Citizens Bank Equipment Finance. His construction group maintains a special focus on the financing of construction and industrial equipment.