Do Bank of England interest rate increases impact my lease agreement?

As a business owner, it is important to understand how different factors can impact your lease agreement. One such factor is the interest rate set by the Bank of England. A change in the interest rate can have a significant impact on your decisions. Therefore, it is important to know how it can affect your lease agreement. In this blog post, we will explore the ways in which the Bank of England interest rate increases, currently standing at 5.00%, can impact your existing lease agreement.

How Bank of England interest rates will have an impact on your lease agreement

Firstly, you should understand that a change in interest rates will not directly impact your lease agreement. In most cases, your lease terms will remain the same, and your monthly payments will continue as agreed. However, an increase in interest rates could lead to economic uncertainty, which could affect your business’s finances.

Linking to the above point, interest rate increases can also lead to an increase in inflation. This could result in an increase in the cost of goods and services. This in turn could impact your business’s expenses and revenue. If your lease agreement includes a clause that allows for adjustments in line with inflation, you may see an increase in your monthly lease payments. Here at WestWon, we offer fixed monthly payments, therefore once your agreement is activated the rate will remain the same.

If your current lease agreement is coming to an end and you are needing to negotiate a new lease agreement, the current interest rate can impact the new rate you are able to obtain.

A change in interest rates can impact the value of lease agreements. If the interest rate increases, the value of a lease agreement could decrease as the cost of borrowing increases. This could result in your lease agreement needing to change in order to reflect the change in lease value.

Finally, if you find yourself facing financial difficulties as a result of a rise in interest rates, you could consider restructuring your business finances to improve your cash flow. Where possible make sure to check the agreement length before entering into the agreement. Make sure you can commit to the entire monthly payment period.

Contact Us

As a business owner, it is important to understand the impact that Bank of England interest rate increases can have on your existing lease agreement. With careful consideration of the potential impacts, you can assess your lease agreement and help protect your business from unexpected increases in lease payments. Here at WestWon we provide fixed monthly payments. These increases therefore, once the agreement has been signed, will have no impact on your existing lease agreement. You can contact us on 01494 611 456 to find out more information.