What rising interest rates mean to leasing equipment

Interest rates have been a major concern for business owners who rely on leasing equipment. As the economic climate continues to change, interest rates might increase due to various factors, such as inflation. If you’re thinking of leasing equipment, a key aspect to consider is the impact of rising interest rates on your business operations. This blog post will provide insights into what rising interest rates mean to leasing equipment and tips on how you can mitigate their impact.

1. Increased Monthly Payments

When interest rates rise, monthly payments on leasing agreements also increase. These higher monthly payments can impact your cash flow and business operations, particularly if your business is heavily reliant on leasing equipment. You might find yourself allocating more funds towards leasing payments, which can negatively affect investments in other areas of your business. With this in mind, you’ll need to re-evaluate your budget and forecasted expenses to ensure that you can handle the increased leasing payment costs. Here at WestWon we provide fixed monthly payments. Therefore, once the agreement has started, there will be no increase in the amount you are paying monthly.

2. Limited Equipment Options

Rising interest rates can lead to increased costs in the leasing industry, causing some leasing companies to limit their equipment options. The cost of leasing equipment might go up since there will be a smaller pool of companies that can offer leasing at a reasonable cost. As a result, you may find that you can’t access all the equipment you require. To tackle this, you can plan by researching and securing leases for the equipment you need before rates rise.

3. Purchasing Equipment Outright

Rising interest rates are a concern, and the potential of increasing leasing costs might prompt business owners to consider purchasing equipment outright. While this is an option, it might not be suitable for all business owners. Some equipment might be too expensive to purchase outright, and there’s the possibility of tying up capital in the process. Before deciding to purchase equipment outright, evaluate your business needs, goals, and budget to determine if it’s a viable option for your business operations.

Rising interest rates can become a cause for concern if your leasing equipment for your business. Business owners must understand the implications of rising interest rates on monthly lease payments and seek ways to mitigate the impact. Strategies include re-evaluating your business’ needs, purchasing equipment outright, and planning ahead to access equipment before rates climb. With these tips in mind, you can navigate the changing economic landscape with ease and lease equipment that supports your business growth. Get in touch with us today to find out more.