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Monitoring Tip |
Rental Fleet Loans
It would be prudent to monitor changes in the equipment utilization rate on portfolios that include a loan to equipment rental fleets.
What percent of the equipment is actually out on rental? Since the equipment must be in good condition to be out on rental (no one is going to rent equipment that is in poor condition or defective), a high utilization rate would indicate that the fleet is being properly maintained. Conversely, low utilization rates could be an indication that the condition of the equipment is not being properly maintained, and therefore might adversely impact values/recoveries.
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