From Hero to Zero: How Financing Deals Are Changing as Interest Rates Rise

Welcome to a new age, one where the trend of offering 0% financing is coming to an end, ushering in a period of determining how to sell in a rising rate environment.

According to a Wall Street Journal article, cheap financing that reinvigorated the U.S. auto industry’s sales following the recession, helping to keep monthly payments affordable and draw buyers from the used-car market, are on a downturn. Additionally, market research from J.D. Power indicates that no-interest loans accounted for just 3.4 percent of all new-car financing in September; down from 9.1 percent two years ago. Auto lenders – the industry that basically invented the zero-down hook – are pulling back from no-interest loans as they become too expensive to offer to buyers of new vehicles.

So, what does this mean for salespeople who rely on the “buzz” zero down advertisements generate? How will they deal with knowing they can no longer pull this attractive offer from their quiver during a deal that’s headed south? It’s time to shift the focus away from rate and communicate a different narrative, even in the commercial equipment industry.

There are three points to focus on when vying to win over your customers in a rising rate environment:

  • Cash flow Benefits
  • Equipment Value
  • Buying Now, Not Later

Cash Flow Benefits

If a business is in the market for a vehicle or an expensive piece of commercial equipment, it’s fair to assume they might not have the cash on hand to pay for it outright. Additionally, most (small) businesses may prefer to conserve cash on hand for any unexpected expenses, instead of risking a large purchase that wipes out their liquid assets. This is where financing comes in. There are many business benefits to financing that outweigh the rate…and maintaining or increasing cash flow is one of them.

Another angle related to cash flow is how Section 179 can provide benefits for customers. By purchasing commercial equipment before the end of 2018, customers can capitalize on an increased deduction limit ($1 million), an increased spending cap on equipment purchases ($2.5 million) and 100 percent bonus depreciation. Posing the question, “do you want more cash or less to run your business” is a simple yet poignant selling point.

Equipment Value

For any dealer or manufacturer, remember, your equipment is valuable, meaning competing on the equipment itself – how it functions, what it can add to a customer’s business, and its longevity – is worthy of some focus. Framing a potential equipment sale with a customer in terms of how this purchase can improve or grow their business plus coupling that with how to pay for it (i.e. financing) and obtain it quickly is a logical selling point. Rates will always fluctuate, but the value of the equipment and what it can do for someone’s business can help to combat sticker shock or rate concerns.

Buying Now, Not Later

There are general arguments any salesperson can devise for why it’s best to buy now, not later. In our current financial environment, however, there are concrete reasons why buying now really does make good business sense for the customer. Equipment costs are rising and will only continue to increase into 2019; this is a valid selling point to discuss with your customers to save them money in the long run.

Many outside factors are influencing the market as well, including the recent raising of interest rates by the Federal Reserve. Consumer and commercial interest rates are likely to rise by 25 basis points and economists predict that the Federal Reserve will raise rates one more time in 2018, most likely in December, and at least three times in 2019. If a business is considering acquiring new or used equipment within the next 6 months, acting before the next rate increase will likely boost cash flow since a business will be purchasing and financing the equipment at a lower cost relative to the revenue that will be earned in the future.


Our goal at Oakmont Capital Services is to work with clients to find the best financing options…right now! Contact an OCS finance professional today at info@oakmontfinance.com or 877-701-2391 to see how we can become an ally when it comes to making financing possible.


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Oakmont Capital Services (Headquarters)
600 Willowbrook Lane, Suite 601
West Chester, PA 19382
Direct  (610) 892 8670
Toll-Free  (877) 701 2391
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Albany, MN 56307
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