Bank exits are tightening truck financing for mid-sized fleets
The prolonged freight recession has significantly impacted the truck financing market, particularly affecting mid-size carriers. Many lenders have exited the sector due to deteriorating credit profiles among borrowers and a challenging economic environment. Kirk Mann of Mitsubishi HC Capital America notes that only OEM captive finance arms, some independent lenders, and bank-led groups remain active in this space. During 2023-2026, carriers with less than two years' experience saw an average failure rate of 85%. The market was previously inflated by a massive asset bubble where used truck prices surged well above historical norms. Mitsubishi HC Capital continued lending through the downturn but now sees weaker credit profiles and higher repossession rates as part of the industry's correction. Mitsubishi has improved recovery on repossessed assets, yet financing remains challenging for carriers with poor financial health. Interest rates range from 5.25% to over 12%, reflecting a market increasingly stratified by risk exposure.
Topics: Credit rationing Freight industry downturn OEM finance arms Truck financing