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In this episode Casey Seymour of Moving Iron LLC  and guest Troy Vosberg of Machinery Finance discuss interest rates and machinery finance options and the options that are available to dealers through Machinery Finance.

They also discuss a recent increase in leasing requests.

This episode of Farm Equipment’s Used Equipment Remarketing Roadmaps podcast is brought to you courtesy of Agrisolutions. 

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Farm Equipment‘s podcast, Used Equipment Remarketing Roadmaps, is brought to you by Agrisolutions.

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Improve performance and durability with a wide range of premium tillage parts and extended life solutions, with Agrisolutions. As the market leader in wearable parts, components, accessories and solutions for tillage, seeding, planting and fertilizing, Agrisolutions is proud of their purpose - to build and feed the world. To learn more about Agrisolutions and their globally recognized brands, such as Bellota, Ingersoll Tillage and Trinity Logistics, visit


Full Transcript

Kim Schmidt:

Hi, I am Kim Schmidt, Executive Editor of Farm Equipment. Welcome to Farm Equipment's Used Equipment Remarketing Roadmaps Podcast. In this episode, Casey Seymour of Moving Iron LLC sits down with Troy Vosberg with Machinery Finance and Machinery Scope. Their conversation was recorded in mid-December. This episode of the Used Equipment Remarketing Roadmaps Podcast is brought to you by Agrisolutions. Let's jump in as Casey and Troy discuss the mid-December Fed meeting and what impact interest rates are having on the market.

Casey Seymour:

I've got Troy Vosberg here from Machinery Finance. We've got a lot to talk about today, Troy, there's no lack of stuff to talk about. And it's talking about what we see happening, and rates, and all those things around us. So how you been, man?

Troy Vosberg:

Good, good, really good. Again, I think just trying to get used to this rising rate environment out there but I think everyone is.

Casey Seymour:

That is an understatement for sure. So talk a little bit about Machinery Finance and Machinery Scope, what that is, and where folks can find it at.

Troy Vosberg:

Sure, definitely. We're based here out in Alexandria, Minnesota. Been on the Machinery Scope side, which is actually our extended service contract division, which I'm sure a lot of guys are familiar with out there. Been in business here for about the last eight, nine years anyway, and offer extended service options for all ag dealers out there. Maybe lower horsepower construction dealers just to really supplement what they're getting, obviously, from their captive insurance companies. Or try to maybe stretch out some terms, or a little older in equipment, or just be there to fill in all those gaps. Been doing that for quite a while.

The finance side of it, obviously, it was started a little bit later. 2018 we started doing a little bit with the finance side. The philosophy was, obviously, to basically do the same thing. Really go out there and try to fill all the gaps that maybe a captive might not quite be filling, and then be able to really provide a service to the dealer other than being just another lender or bank out there. We wanted to create an opportunity for them to have their own finance division. Even if they had their own finance division, to be another outlet to some of the larger dealers out there where we could do some soft pulls on credit history and give them guidance on where to go and what to do. And luckily we've been able to contract with about 35 different lending opportunities out there giving us a pretty wide array of construction equipment lending, ag equipment lending, titled equipment lending, and then try to cover all the different gamuts of credit out there.

You get a lot of differences in credit and a lot of that's revolved to economic conditions and everything. We may be running into some of that right now we'll see what happens as we go. We wanted to be able to provide the best of the best on a credit rates if we could. Be extremely competitive there all the way down to stuff that might be a little bit more difficult to get approved. They call it maybe more of a subprime credit. But in reality, as things have grown over the past few years and more and more dealers are on the platform, it's become a go-to where they feel like they can just wash their hands of it a little bit and keep selling equipment the way that they would like to sell equipment.

Casey Seymour:

Right on. Nice. Let's talk about what's going on in the CPI environment. So you had the CPI report come out today, the stock market's all excited about that. The Fed meets again tomorrow. What is today? The 13th, 14th. So it'll be December 14th they'll have their Fed meeting and they'll release their stuff. Everybody will come through it and by Thursday morning the world's going to probably come to an end again. Until Friday, then it'll all bounce back. All intents of purpose it looks like they're going to see a half inch ... Or half inch. A half percent rise in rates again. Right now you're seeing a lot of 7.25 to 7.5 range stuff out there. I guess as you look at this, Troy, and your picking your brain here a little bit about what's going on, what's your gut reaction to seeing an 8% interest rate or a 7.75 Interest rate on a pretty regular basis now?

Troy Vosberg:

I mean, you hit the nail on the head there. I mean, I really can't see it not being somewhere in that range here somewhere in the near future at this point. I think with the Fed meeting, like you said, today and tomorrow they'll release their ... What I guess draws everyone's attention is that fed funds rate that they're going to set which is ... It's the guidance is what it is for banks to lend to each other on a nightly basis on reserves, and borrow if they don't have the reserves that they need, obviously, to keep their percentage up that's determined by the Fed. That's gone up. Has it gone up three or four points here just in the last what six, eight months, nine months altogether? That real cheap money that we saw before we saw it for a long time so everyone gets really used to that.

I mean, it's just like fuel prices. All of a sudden they start rocketing up and people get all worried about it. In all reality, the interest rates right now, if you look historically, are still actually really not that high compared to where they have been in previous times. It's just I think we've got used to those really low rates. I mean, let's face it, the lower they are the easy it is, obviously, to produce a profit for a lot of people out there borrowing money. Right now they're sitting at 3.75 to 4% roughly for that fed funds rate. I think their biggest issue that they're trying to solve for is, obviously, to circumvent inflation right now. And I think they'll continue to probably look at raising possibly that rate until we see some backtracking on some of those inflationary numbers.

They talk about this inverted curve where we've got long-term rates, 10 years, compared to say a short-term rate, a two year, which are dropping a little bit quicker than what the two-year were just recently. You look at those mortgage rates and they've actually gone down about 3/4 of a point over the last month, month and a half, but you haven't seen that much flexibility on the short-term rates. I've read a lot of speculation on it. I mean, speculation is probably eventually for them to maybe tap out somewhere around that 4.5, 4.75, 5.0 rate so I think we do have a little bit more.

The big thing will be if they do come out like you mentioned, and it's a 1/2 point instead of 3/4 of a point. The last how many times it's been a 3/4 point increase each time. If it's 1/2 there's all of a sudden a little bit of a sigh. I mean, things are still going that direction but at least we're starting to feel like maybe there's a little bit of a top out at this point. I think it's probably pretty inevitable that there is recession coming it's just a matter of how difficult is it and how long is it going to last. Even if those rates do get to that level, which like you said, if you're looking at rates in the sevens now and fall a little bit I think we're probably at our top end I'm hoping at that point.

Casey Seymour:

I hope so too, I hope you're right. Hope you're right. All right. What are you guys doing over at Machinery Scope right now? I mean, what are some of the stuff that you're doing? I guess define a little bit what it is that you're doing there. I mean, it's not an average run-of-the-mill type of lending institution, you've guys got some different packages and different groups of things that you do. But you're primarily playing on the lease side of stuff, is that correct?

Troy Vosberg:

I actually do both finance and lease.

Casey Seymour:

Okay. Okay.

Troy Vosberg:

I do that. Like I said, our big thing was to try to create one spot for either finance companies at the dealerships, or the salespeople that they could come to and have everything from one lender to 35 lenders with the guidance, obviously, in the background to try to assist on where to go. It seems like every lender out there, every finance company out there, has got some sort of different regulations or I guess probably stances on credit that they would rather see come across.

You have your real solid A credit players out there and then you have some that'll allow maybe a little bit of what we would call more of a B plus or a B credit tier where it just doesn't quite maybe hit that say 700 mark in credit if we were going to relate it. Maybe they're just a little underneath there, maybe a couple 30 day late payments or something, but still should be able to get an approval somewhere. It's a matter of finding who likes the ag business, who likes the construction business, who likes it with a little bit more cash down, who will take it without any money out of pocket at that point? Who's going to specialize a little bit here or there?

Without everyone else having to try to figure out where those places, are and the best places are out there, we've contracted and we've been able to sit behind here and be able to just act as the expertise in that area and say, "Hey, we've got the platform, we can create the credit application links that are customized for each dealer group. You guys can carry them on your websites, you can email them, you can text them to customers, they can fill out applications electronically, they can figure things out on our app that we have out there at that point."

When they come over we're able to take a quick look and do a softball credit pull. And a soft credit poll, as a lot of people understand, does not hit your credit report. It's something that's very similar to maybe what an insurance company will do when they're renewing a policy or something like that out there. They may check it but it's not going to hit your actual credit report. So we can get a pretty good idea of where that's at and the best place to go, and probably narrow it down to the top two at that point, and really probably either take it from there or just stay behind the scenes and let the salespeople or the finance division run with it. A lot of that nowadays we see is all involved in eDocs. So eDocs is the next step which is very easy, it's a matter of getting funding instructions from the dealers, and then we handle all of that for them at this point.

I guess with having as many dealer groups as we have on the platform there's a lot of volume that's being driven towards some of these lenders. And, of course, when you have 35 you don't use all 35. I mean, you do have your favorites, and you have the ones that are the best I think out there right now, and then you have some backups for certain situations. When we're driving that much business towards those specific lenders, a lot of times we can get opportunities or programs with them. We've been able to negotiate on behalf of the dealers to be able to draw down those interest rates a little bit.

Right now, like you said, I mean, a lot of the talk is sevens out there. We actually have got rate capability in the lower sixes, middle sixes right now on ag equipment, and could go on six, seven years at this point. The same thing on the construction side of the business. I guess the last probably three to four months since we've seen this increase, we've had a couple opportunities be able to hold tight for us, and just create special programs, and keep our rates a little bit lower because of the volume that we're sending at this point. It's made a big difference.

And like I said, I think we've gotten to the point with some of the dealers where it's just a "Hey, we got the app, we're sending it over here, you guys handle it, let us know when it funds at this point. And if you need anything else from us give us a holler." But have I guess maybe replaced a little bit of what they've had to do in the past and then also assist in gaps that maybe the finance team might need just a little bit of expertise on, or maybe another option out there that we can push forward.

The rate opportunity for us for a while there when we first started, Casey, it was interesting because we could maybe match or be right around there with A credited player but we were getting a lot more business maybe on some of the stuff that was not being approved by the A credit players out there, the natural go-to's in the industry. And as we've grown and built more volume we've been able to now be able to negotiate some of those opportunities with some of those lenders, and now all of a sudden our rates are actually showing up anywhere between 1/2 to sometimes 3/4 of a point better than the A rate players out there.

That happens, obviously, with volume as you go, you can't do that initially right away up front. It's been real interesting and we've seen quite a bit of growth, obviously, from day one, but this last year has been a doubling in business. It's exciting for us. I mean, we're, obviously, trying to make sure that we're turning things around as quick as possible and adding people where we need people at that point. It's an interesting time in the market too, right? I mean, you're looking at a lack of inventory and rising interest rates and so it's ... There's a little bit of a pullback, but it seems to me right now, and I don't know what you're seeing, but seems like there's money out there it's just a matter of making sure that they can, I guess, find the right inventory before it gets swallowed up.

Casey Seymour:

I think that's exactly right. I mean, you're looking at what's going on out there with equipment and, like you said, there's plenty of money out there right now. Our guys are really looking at what their options are and what they have available. And what they're looking for is not necessarily what's available. And I think that's the biggest stumbling block we see right now more than anything.

Kim Schmidt:

We'll get back to the conversation in a minute, but first I wanted to take a quick moment to thank our sponsor Agrisolutions. Improve performance and durability with a wide range of premium tillage parts and extended life solutions with Agrisolutions. As the market leader in wearable parts, components, accessories, and solutions for tillage, seeding, planting, and fertilizing, Agrisolutions is proud of their purpose to build and feed the world. To learn more about Agrisolutions and their globally recognized brands such as Bellota, Ingersoll Tillage, and Trinity Logistics visit Now back to Casey and Troy.

Casey Seymour:

What I see happening is we see a lot of one-year-old, two-year-old low-houred stuff out there and that's great, it's awesome. There was a need for that stuff and we've got that filled up, we've got the people that are interested in doing those things. The issue that I think we're running into is that we have really low-houred stuff and really hired stuff and nothing in the middle. And I would like your opinion on this.

What I'm starting to feel a little bit and what I'm starting to see a little bit is very similar to what we saw with the lease craze in '14, '15, '16, '17 all the way through up to '20, or whatever where we looked at a lot of leases and we were selling a payment we weren't selling necessarily the price of the machine. And I think we've always done that to some extent but now the forefront of what the machine costs is really in people's minds right now. So I think we're going to revert back to that with high-interest rates and what that does to the payment structure of the machine, what that looks like in the long term. Five or six years down the road what's the interest that you're going to pay on those things? It feels like to me we're slipping back to that. We got to be creative and start thinking about payment structures and what that looks like. Are you having those conversations? And are you feeling the same thing that I am?

Troy Vosberg:

Correct. I think the leasing requests, as far as quotes, have gone up actually over the past say 30 to 60 days. So I think you're right in regards to that. What's going to be interesting though is where do the banks or the leasing companies, where are those lease residuals going to fall into play. Because I think before when we talked about that early run, the '14, '15, '16 like that, I think residuals were they probably a little too high. Probably in regards to looking out. Who would've foresaw what happened at that point?

The issue you run into there is all of a sudden prices dropped like crazy, and then these leases were coming due and everyone was turning these pieces of equipment back into the banks. Captives were sitting here with all this equipment, and prices on these pieces of equipment were quite a bit lower than what they were holding at. I think they're going to look at that and they're going to say, "Hey, we don't want to get ourselves in that situation again." We definitely want to move equipment, and we want to definitely move new equipment, but at the same time are they going to be able to carry those higher residuals? I don't know if you necessarily need the higher residuals like you had. It seems like we're still doing leasing up to this point on ... In the popular area, I think, obviously, has been right in that probably one to four-year-old piece of equipment. Maybe you're sitting underneath two, 3000 hours or something like that on those pieces of equipment and you've still been able to get some pretty decent residuals on those. We've seen a little bit more of that happening.

Again, it's what the auto industry perfected for a while there when they said, "We really shouldn't be selling on interest rates," which we do a lot of and we push a lot of out there. And they decided hey, what really seems to get things moving is payment options. When you can break things down to cost per hour, cost per acre instead of a dollar sign, instead of what that interest rate is ... Because let's face it if you look back when we first started talking about these rates started going up ... I took a look the other day at March of last year and I think our rates were sitting in the upper twos. So all of a sudden I mean you've more than doubled where you're sitting at right now.

A lot of guys will want to pull back a little bit, but yet if you've got that cash out there there's still probably something they need to do with that by the end of the year and maybe even into next year at this point. I do think that's something that they will come back to it's just a matter of where are those residuals going to be at. Are they going to be competitive enough? The other thing that I think will maybe slight that just a hair is the bank's natural feeling, I think, when rates start to rise like that of maybe pulling back a little bit on credit, right? I think they're starting to tighten up a little bit more. I think you'll see that.

I took a look at a report the other day that had November chapter 11 bankruptcies and they were up 74% compared to last year November. Now, that's just a number, but at the same time what that usually does to banks is they go "Well, wait a minute, maybe we need to really recondition on what we're looking at and what we're buying." And so it's going to be real important I think for the dealers out there to be able to have a pretty wide variety of options at their hands, right? They have a number one or number two, and those number one or number twos decide to tighten up a little bit and maybe not do as much in regards to that leasing end of it.

They need to have some other options or need to have some other outlets out there that they're going to be able to get these things done at still, otherwise, the people who do, who might be sitting next door who are using those are going to swallow that business up. The equipment isn't prevalent, right, and it seems like everyone's looking all over the country for equipment. And it seems there's some out there it's just a matter of are we able to get these things done the way we have in the past. And so it's nice to have that bucket of different options that you can have no matter what happens with the credit when it comes to that.

Casey Seymour:

So I think if you look at moving into '23, I mean, I think you made a good point there where banks are going to start taking a hard look at a lot of this stuff a lot more intrinsically than they've looked at stuff in the past, right? It's easier to get away with stuff when you're lending money at 2.5%, not 6.5 or 7%, or 7.5%, or something like that. That money really jumps up there quick. What are your thoughts on '23 and how do you see things moving along? I mean, I feel like '23, there's going to be plenty of opportunity out there to look at some stuff. There's some big crops we talked about, a lot of big crops all over the world. But we're also having a lot of struggles right here right now just getting the stuff that we need to have taken care of to happen. I guess as you look at '23, what are your thoughts there and how do you foresee your lending options playing into that?

Troy Vosberg:

Right. It's interesting when you talk about the lending options too. There's a couple different lending options out there. I mean, you have your lenders who are banks who are able to borrow from the Fed at that point and they're able to borrow it maybe where that fed funds rate is at et cetera. And then you have your others that aren't necessarily fed funds banks that are finance institutions that are trying to borrow from a warehouse line or maybe they're trying to borrow from an asset-backed security that they've offered or something like that. Those rates tend to get a little bit higher. So you'll see some differences. I think there's a little bit of a gap I think we've already seen between some of the banks out there and others just because of who they're borrowing their money from at that point. That'll probably play a lot into 2023 who's going to be getting that business? So again, a real good thing to have a larger opportunity or a larger group in front of you to be able to take advantage of that.

To me, and I'm not the expert, I'm not the one who's going to, obviously, make the decisions at fed level or anything like that whatsoever, but I definitely think that until inflation starts to go the other direction they're going to hold. And from what we've studied and read, we see that carrying for a little bit longer. I don't think it's going to go up and then come back down again right away. I'm hoping maybe they can start tailing off here into the beginning of this year where the increases stop. But then I think you're probably going to see that rate level held for a while. I've seen people, and I've seen investment articles in regards to where people think the recession's going to hit a little bit in the beginning of the year and then things are going to pick back up. And then I've seen others say, "No, it'll hit towards the beginning of the year, and it's going to carry through 2023 based on that."

Beyond that, I mean, obviously, it's very difficult to predict anything but I wouldn't expect ... And again, this is just my opinion. I wouldn't expect to see those seven, eight rates that are going to be there and happening come down much quicker in 2023. It's going to be a little bit of a new normal, as they may call it, for a year or so and then we'll have to see what happens in regards to the inflation side of it. And like you mentioned, there's cash out there so I think the buying is going to continue even though the rates are going to be a little bit higher.

I guess the same thing as fuel to me. You see those fuel rates go up and people still do what they need to do. They still drive around, they still get from place to place. It's a necessary evil. Maybe they'll reduce a few things here or there. So I don't see it cutting decisions off really large it's just going to ... The other piece of that puzzle, obviously, is how quick the stuff get produced at the factory so we're able to continue this role of one to the next guy to the next guy. Like you've alluded to on many other podcasts and everything too, that trade cycle, the whole thing gets broken up with not having that new piece of equipment able to move to that guy that's buying that and that trade going to the next and the next.

It's not affecting just one transaction it's affecting five in a row. If we can get more of that produced and that can loosen up a little bit, I think the interest rate part of it will die down in regards to being that important. It's always going to be important. Guys don't want to borrow money when it's a little bit higher than a little bit lower, but at the same time business does go on and I think we're still going to see a decent amount of purchasing. And like you said, probably maybe a little bit more leasing to offset some of that. And some guys that may want to just lease for a few years and wait to see what happens with the values of the equipment and if they're in good shape, and the values are still high, great, they got equity in it. If they don't, they're able to maybe turn it back in at that point.

The price you pay for a walkaway lease there's quite a bit less residual. I still haven't seen a lot of requests for that yet. I see a lot of requests for pro leases or first amendment leases or track leases at this point where they're probably going to buy it out just to be able to keep the residuals high enough. I think once you start seeing more and more people want to take advantage of a walkaway lease then that's when you'll start to see more of that adjustment and when we'll probably see a little bit higher percentage of customers out there.

And a lot of it has to do with how we present it at the dealership too. Are we out there presenting that to the customers or is it just the finance end of it? I think the guys that are able to present both those options are the ones that are always going to win when it comes down to it. You just got to know where to go, and how to handle it, and understand that piece of it, and be comfortable with it so you're putting your customer in a good position.

Casey Seymour:

All right, last question here and we'll hang it up here. I think the one thing that I would say is a bit of a moniker I guess on my radar here is upgrade kits and what that looks like. Whether it's precision planting stuff or Deere's upgrade kits for their planters, and sprayers, and those things. Additional technology can add on those things. I foresee that there's going to be less powertrain actual turnover from a customer to being sold and way more of this upgrade kit stuff put together on there and how those things come together. From your perspective and what you're seeing happen on the lending side of it, are you seeing more guys looking at "Hey, I'm looking at taking my planter and making it new again type of thing and hey, I'm looking at these little additional whatever, technology add-ons of sorts whether it's guidance systems or whatever it might be?" How are you looking at that and how's that fitting into your portfolio?

Troy Vosberg:

Correct. We've actually seen some requests for just guidance systems which we've been able to ... Generally, and a rule of thumb a lot of times, as long as there's a serial number involved, that's something that we can handle pretty easily in regards to being able to finance that on its own. There's a lot of lenders out there who want to tie that directly to the piece of equipment too and make sure that that's held for collateral. But then there's others that'll just say, "Hey, as long as we got the serial number we're okay just actually using that as collateral to back this loan at this point." I think you're right and I think there's ... We probably felt it this last year, it seems like there's a little bit more of a race now to get to that autonomous tractor at that point, or autonomous equipment or different things that I believe are pushing that further.

And I think our big players in the industry are really ... Not that they have them available to everyone because there aren't enough of them being produced, they are going to try to be able to ... They're going to tie in some sort of in between that they can do until they're able to get their hands on that equipment, and that might be adding on some of that guidance equipment et cetera that I think are going to help. It is definitely something that can be set up on its own contract. If you've got someone looking at not necessarily maybe writing a check for something like that and keeping cash, we all know cash is king during these times, that's definitely something we can assist with and set those contracts up. And it's a matter of the same setup. It's a purchase order, it's a serial number that's on it, it's a description, and it's an application, and it's taken care of just like the actual piece of equipment itself.

Casey Seymour:

Right on. Okay. That's something I'm seeing more and more of whether it's wanting to do some more stuff like that because of technology. Well, Troy, I appreciate you being on the podcast, man. If folks want to reach out to you guys over at Machinery Scope, Machine Finance what's the best way to do that?

Troy Vosberg:

Sure. Hey, the best way I think would be to just get to our websites. Obviously, those are and then the finance is, obviously, the same thing. It's We've got a couple 877 numbers that they can reach out to if they want to reach out directly to the Finance Scope side and ask any questions or need any assistance. That number's 877-687-1444 and we'll be happy to answer any questions, take a look at anything. Just like I said, be in your corner and try to get you guys some assistance to move more and more equipment even though we're running into some pretty challenging times.

Casey Seymour:

For sure. For sure, man. Well, I appreciate you being on there, man, I'm looking forward to seeing you guys. All right. I am Casey Seymour, Moving Iron podcast. Check me on Facebook, Twitter, and Instagram at MovingIronLLC. Also, go to Moving Iron podcast on LinkedIn, and check the video version of us at Moving Iron podcast on YouTube so check it out there. Go to Moving Iron LLC for everything Moving Iron related. And with that, I'm Casey Seymour, Troy Vosberg. Be smart folks.

Kim Schmidt:

Thanks to Casey and Troy for sharing their conversation with us, and to Agrisolutions for sponsoring this podcast. You can keep up on the latest industry news by registering online to receive our free newsletters. Visit For Casey as well as our entire staff here at Farm Equipment, I'm Kim Schmidt, thanks for listening.