Customers Who Borrow From CaterpillarNarrow moat

Caterpillar (CAT) — moat facet

Caterpillar lends to about $25 billion of its own customers, at past dues of 1.31%, with the machines as collateral.

Many of Caterpillar's customers are also its debtors. Cat Financial offers loans, leases and other financing to customers and dealers1, and its customer portfolio has an average original term of approximately 51 months, with an average remaining term of approximately 28 months at the end of 20252. It typically keeps a security interest in the financed equipment and requires physical damage insurance3.

Cat Financial finance receivables, 30 June 2026 ($M)10,844Current14,364Long-term294Allowance for credit lossesCaterpillar Form 10-Q and results release, Q2 2026
A $25 billion loan book with a thin loss reserve.

The book is large. Finance receivables were $10,844 million current and $14,364 million long-term at 30 June 20264.

Its credit quality is currently strong. Past dues were 1.31% at the end of the second quarter of 2026, against 1.62% a year earlier; write-offs, net of recoveries, were $20 million in the quarter; and the allowance for credit losses was $294 million, or 0.84% of finance receivables5.

Lending to customers helps sell machines and keeps the customer in contact with Caterpillar between purchases. The company says Cat Financial has been providing financing for Caterpillar products for over 40 years, "contributing to our knowledge of asset values"6. That knowledge is what makes the collateral worth lending against.

The trend in the reserve is reassuring. The allowance for credit losses was $284 million, or 0.86% of finance receivables, at the end of 2025, and $294 million, or 0.84%, at 30 June 20267. Financial Products' revenues grew in the quarter on a favourable impact from higher average earning assets across all regions8.

The cost comes in a downturn, when the same customers stop buying and start missing payments. Past dues are the figure to watch; a rise back above 2% would mean the customers the company financed through the boom are struggling.

Moat trajectory: Holding steady

Past dues 1.31% in Q2 2026 against 1.62% a year earlier.

The number that tests this moat
Reported
Cat Financial past dues, latest quarter
1.31% (Q2 2026) against 1.62%

Credit quality of the customers Caterpillar finances; a rise above 2% would mean boom-time borrowers are struggling.

Source: Caterpillar Q2 2026 results release ↗
References
  1. ReportedCat Financial offers loans, leases and other financing to customers and dealers, and its customer portfolio has an average original term of approximately 51 months, with an average remaining term of approximately 28 months at the end of 2025.
    Caterpillar Form 10-K for fiscal 2025 - Item 1 business: dealers and distributors. — FY2025 · publ. 13 February 2026 · source ↗
  2. ReportedCat Financial offers loans, leases and other financing to customers and dealers, and its customer portfolio has an average original term of approximately 51 months, with an average remaining term of approximately 28 months at the end of 2025.
    Caterpillar Form 10-K for fiscal 2025 - Item 1 business: dealers and distributors. — FY2025 · publ. 13 February 2026 · source ↗
  3. ReportedIt typically keeps a security interest in the financed equipment and requires physical damage insurance.
    Caterpillar Form 10-K for fiscal 2025 - Item 1 business: history, products, Cat Financial, employees and order backlog. — FY2025 · publ. 13 February 2026 · source ↗
  4. ReportedFinance receivables were $10,844 million current and $14,364 million long-term at 30 June 2026.
    Caterpillar Form 10-Q for the quarter ended 30 June 2026 - backlog, outlook, tariffs, dealer inventory, balance sheet and the RPMGlobal acquisition - financial statements and notes: balance sheet, cash flow and the RPMGlobal acquisition. — Q2 2026 · publ. 5 August 2026 · source ↗
  5. ReportedPast dues were 1.31% at the end of the second quarter of 2026, against 1.62% a year earlier; write-offs, net of recoveries, were $20 million in the quarter; and the allowance for credit losses was $294 million, or 0.84% of finance receivables.
    Caterpillar second-quarter 2026 results release, Form 8-K exhibit 99.1 - segment results and Cat Financial credit. — Q2 2026 · publ. 4 August 2026 · source ↗
  6. ReportedThe company says Cat Financial has been providing financing for Caterpillar products for over 40 years, "contributing to our knowledge of asset values".
    Caterpillar Form 10-K for fiscal 2025 - Item 1 business: history, products, Cat Financial, employees and order backlog. — FY2025 · publ. 13 February 2026 · source ↗
  7. ReportedThe allowance for credit losses was $284 million, or 0.86% of finance receivables, at the end of 2025, and $294 million, or 0.84%, at 30 June 2026.
    Caterpillar second-quarter 2026 results release, Form 8-K exhibit 99.1 - segment results and Cat Financial credit. — Q2 2026 · publ. 4 August 2026 · source ↗
  8. ReportedFinancial Products' revenues grew in the quarter on a favourable impact from higher average earning assets across all regions.
    Caterpillar second-quarter 2026 results release, Form 8-K exhibit 99.1 - segment results and Cat Financial credit. — Q2 2026 · publ. 4 August 2026 · source ↗
Sources
Generated September 25, 2026