Want to buy heavy equipment for your construction business? Worried about rising interest rates? As equipment financing companies make adjustments for inflation, rising loan rates, and lengthy lead times for construction equipment, buyers are confronting formidable challenges to buy their choice of equipment without having to pay hefty upfront costs.
A buyers’ ability to service their debt and make larger payments may be impacted by higher interest rates, which could affect their cash flows. Here are some equipment financing tips to manage the current situation of rate rise:
1. Lock in your interest rate
Whether you handle it yourself or depend on your dealers, it pays sense to compare interest rates from trustworthy lenders because they play a significant role in your equipment expenses. Although most lenders are reluctant to offer rate locks longer than 30 days, short-term rate locks can shield qualified purchasers from interest rate rises.
This is because rates are changing so quickly. The down payment and loan term, in addition to interest rate, are other factors that affect the overall cost of ownership.
2. Examine leasing options
Leasing can be an excellent alternative in today’s market, according to several lenders. Leasing is an appealing alternative for many consumers looking to purchase equipment because of high interest rates and rising equipment prices. Although renting equipment has several advantages, it is less flexible than taking out a conventional loan.
A customer should think about the jobs to be done, the number of hours expected, the value of the warranty and the newest technology, the desired payment amount, and whether or not they want to return the equipment or buy it when the lease expires in order to choose the best lease terms.
3. Look for a financing company
When selecting a financial partner, buyers may want to look at all of their options in light of rising interest rates. While conventional banks can be an alternative, their competitiveness may be compromised due to their lack of experience in financing equipment.
Captive finance firms provide loans and leases that are tailored to their clients’ requirements. They also provide flexible choices, such as seasonal payment schedules, for clients who might not be able to work during the winter or who aren’t making money during that time.
4. Review all of your alternatives for purchasing equipment
When choosing whether to rent, lease, buy, or rent-to-own equipment, there are a few things to take into account. These include the type of work that needs to be done, how long you need the machine for, your budget, and financial reporting.
The most flexibility is provided by rental, but the cost is usually higher. By using deductible interest and depreciation costs, ownership can reduce taxes. Payments can be reduced by leasing. It’s critical to consult with financial specialists to ascertain the best course of action for your company.
If you are looking for an equipment leasing company in Abbotsford, rely on Sandhu & Sran Leasing & Financing. We are your trusted equipment financing partners, specializing in a wide range of equipment leasing, commercial leasing, and truck loan services.
