Reasons to Finance Equipment in 2022 – Inflation and Rate Increase Hedge
You’ve been reading the news, right? Inflation is here, and it’s not going away anytime soon.
Here’s what this means for all of us: over the next year or three, we’re going to pay continually higher prices for just about everything. Or put another way, you’re probably not going to see a lower price on the business equipment you need as you are right now.
Let’s talk about rates too. Right now, they are still quite low. But as you’ve probably heard, “the Fed” is talking about multiple increases this year. This is to combat inflation. But while this approach has proven effective in the past, it’s also a fairly slow burn – it takes months/years, especially since this inflation is largely pandemic-influenced. The supply chain and labor pool issues that are driving this are long-term problems.
So not only is the equipment you need at its lowest price right now, the cost to finance it is also at its lowest price right now.
That “right now” is fluid as well. Assuming you’re reading this in 2022 or thereabouts, it means today, as the needle will continually move upward.
Bottom line: the sooner you can buy / finance the equipment, the less it will cost you. And buying low is always good business.
There’s also a very strong competitive advantage here. If you can pay less for your equipment than your competitor does, you are in a stronger position to offer a better price (or better invest in your service level).
This was not always a big deal – there were times when the cost of equipment (and the cost to borrow) was predictable and low. The pre-pandemic years were very strong for this.
But now the playing field is not so level – it’s tilting upwards, and it’s happening relatively quickly. The companies that strike early have an advantage that can never be taken away – if your construction equipment monthly payment is lower than your competitors, or if you pay less for a CNC machine than the other guy in town, then you’re in a very good place competitively speaking.
We could get into all kinds of advanced economic math and percentages that explains why buying and financing now is a good investment. But the simple fact of “it’ll never be as cheap as it is today, nor will rates be as low as they are right now” should be reason enough. Financing equipment today makes excellent sense.