Interest rates have been progressively increasing over the past few years, in an effort to keep national inflation under control. Even if you're not extremely tuned in, it's tough to overlook the rates' ominous upward tendency; it's almost as if you can hear the financial environment shifting. 

If you are a construction contractor, you are probably keeping a close eye on these gradual interest rate rises and considering how they might affect an upcoming machinery purchase. The question of whether to wait for rates to decrease again arises. Will they even begin to decline? Is it sensible to make a financial move right away, or would it be better to hold off a little bit?

Although there are ways to respond to the effects of increased rates, you may want them to be a little bit lower because interest rates have a big impact on the purchases of new or used construction equipment. Let's look at four practical suggestions that you might use when communicating with your financial provider. These suggestions might improve your agreement and lessen the impact of rising interest rates on your purchase.

Combine Your Financing to Save Money

Adopting a bundled strategy for heavy equipment financing can result in benefits beyond simply low interest rates. Some equipment manufacturers such as Volvo offer these bundle financing options on the purchase of new or used heavy equipment. One such example is the combination of buying and financing a qualified Volvo machine through Volvo Financial Services (VFS), along with an extended warranty and Repair Maintenance Agreement. Up to $4,500 in Smart Commercial Account credit could result from this productive engagement. This credit, which has no up-front charges, can then support equipment rentals to expand your fleet for prospective projects or even cover future maintenance and repairs.

These bundles frequently result from the collaboration of many business groups to create customer-focused solutions. Larger banks, in comparison, often lack such manufacturer relationships, which may limit their ability to create personalized packages for particular deployed equipment types.

Investigate Customized Financing Programs

Customized finance programs, sometimes referred to as customized financing solutions, are specialized lending arrangements created to meet the particular financial requirements and business-specific circumstances of each individual company. These programs acknowledge that every business has a unique set of financial, credit, and risk profiles. Lenders attempt to account for these variations by providing flexible terms and conditions, producing a financing solution that closely resembles the borrower's financial circumstances.

These programs stand out for their adaptability when it comes to loan terms, payment schedules, and collateral needs. A closer working relationship between the lender and the borrower is frequently part of customized finance solutions. With the help of this cooperation, lenders are better able to comprehend the borrower's changing demands and make any required modifications to the financing arrangement.

Working with PPP-Free Lenders

Prepayment surcharges (PPPs), which lenders impose upon early debt settlement, might limit the flexibility of loan repayment. While most conventional banks require PPPs for financing construction equipment, some renowned financial services provider stands out by not requiring them e.g., Volvo Financial Services. You can prepay your loan without paying any penalties if you work with a captive financing company like VFS. Alternatively, if interest rates start to decline, you should take advantage of the chance to refinance your loan at the new, lower rates.

Consider Equipment Leasing to Increase Flexibility

Equipment leasing can offer a more flexible course of action if rising interest rates are a worry. By providing you with regular monthly payments for the duration of the lease, leasing promotes consistency in your financial planning. In contrast, loans with variable interest rates may have a negative influence on your cash flow. Compared to outright purchasing, equipment leasing frequently has a cheaper starting cost. By releasing capital for other investments or uses, this financial flexibility reduces a company's sensitivity to rising interest rates.

In addition to financial benefits, leasing also results in end-of-term flexibility. You can take advantage of technical improvements or adapt to changing business needs by choosing to return, renew, or upgrade your equipment. It is advisable to consult your tax advisor or attorney before entering into a lease since certain lease structures may provide off-balance sheet tax treatment, protecting your lines of credit, and more.


The fluctuation of interest rates continues to be a major factor in the financing landscape for construction equipment. Bundling finance, looking into customized programs, working with PPP-free lenders, and adopting equipment leasing stand out as strategic moves in managing these changes. You may not only withstand the effects of rising interest rates by proactively pursuing these possibilities, but you can also cover a sustainable route for growing and optimizing your fleet of equipment. Your finance strategy can make all the difference in preserving a competitive edge and assuring future success in a world where purchasing costs are steadily rising.