Inflation and rising interest rates have complicated things for construction equipment buyers. It is expected that the interest rates are going to continue to rise so buyers need to be prepared. The US region manager for cat financial said that contractors should be prepared as they might have to pay higher interest rates then what they were quoted when they first ordered the machines. High-interest rates impact heavy equipment buyers negatively as they increase their payments and impact their cash flow. The following are a few tips to help you finance heavy equipment and manage in the current environment.
Rate Locks
When purchasing heavy machinery considering the interest rates is really important as they are a key component of your machinery’s ownership costs. Make sure to look at the rates offered by different reputable lenders. As a qualified buyer you will have the option of locking in your rate for sometime. However, since the interest rates are changing so quickly it is unlikely that any lender would offer more than a 30-day rate lock. Apart from the interest rates, the down payment and the length of the term also have an impact on the total cost of ownership of the equipment. Due to the current situation more and more dealers and buyers are having open conversations about how to finance heavy equipment purchases.
Consider Leasing
Lenders believe that it might be a good time for people looking to acquire heavy equipment to consider a lease. Due to the high interest rates and increased construction equipment prices customers can get maximum return on their investment by leasing equipment instead. You can talk to your industrial equipment supplier about whether or not leasing is the right option for you.
Look for a Trustworthy Partner
When you are choosing a financial partner make sure to look at all the available options. Although most people opt for the conventional route and choose banks because they do not know much about equipment financing and are not aware of other lending sources. There are other captive finance companies such as John Deere financial and cat financial that offer loans and leases specifically designed for construction equipment buyers. Since these companies are more familiar with the industry, they are able to provide more flexible payment options for customers.