How BOC’s Latest Interest Rate Affects Equipment Financing?

Planning to finance your business equipment? Want to know if the latest interest rate cut could help you in sealing a low cost finance deal? In its latest announcement, Bank of Canada announced a significant overnight rate cut of 50 basis points, taking the current rate down to 3.75% from previously 4.25%.

Along with this, the Bank of Canada’s Governing Council issued its quarterly Monetary Policy Report, which included predictions for inflation, economic growth, and risk assessments for the Canadian economy.

How Rate Cut Works For Financing?

If you are still wondering how the rate cut will affect your financial decisions, especially when getting equipment finance, let us help you understand how it works.

When the Bank of Canada reduces its interest rate, banks and other financial institutions reduce their prime rates on loans and mortgages too, thereby boosting economic activity. This means the prime rates will go down and this low prime rate indicates that individuals and businesses will pay less interest on loans. This allows businesses with fewer budgets to spend more on financing, hence stimulating the economy and inflation.

Not only this, the rate cut helps in improving the cash flow, thereby allowing businesses to invest more in expansion, inventory addition, staff recruitment, and other operational and productivity requirements. Also, lower interest rates plays a significant role in making certain businesses eligible for opting refinancing for existing loans and bringing down the overall expenditures.

Impact Of Rate Cut On Equipment Financing

When interest rates and borrowing costs fall, businesses planning to expand their inventory should consider it the right time to take on more debt as the economic conditions remain uncertain and the rates may come down further.

Also, the businesses struggling with high financing costs can benefit from the rate cut to pursue their financial goals without impacting the cash flow generation. Lending rates for loans and leases are already reflecting market predictions for future rate adjustments.

In addition to market changes, your credit score has a direct impact on your interest rate, which means that the higher your credit score, the lower your interest rate in general. 

If you want help with business equipment finance in Abbotsford and Surrey amid the interest rate drop, our financing specialists at Sandhu & Sran Leasing & Financing can help you out. We make sure our clients get access to the best financing deals available at the lowest possible rates and save dollars in repayments.

For more details on the latest rate cut and your equipment financing needs, give us a call today.