Implications of a Low Rate on a Lease or Other Finance Agreement

Why Other Factors May be More Important Long Term

By: Mike Langfald, GreatAmerica – When evaluating the right finance provider and program for your company, one factor that comes into play is the rate. It is no secret that the price of financing varies among providers. And when you have a team that is incentivized by money, sometimes companies or individuals seek out the lowest rates available. In this blog, we want to provide insight into some of the unintended implications when you base your decision solely on who offers the lowest rate.

What are the side effects associated with a low rate?

When shopping around solely based on price, there are several factors to be mindful of for you, your company, and your customer.

First, acknowledge that finance companies generally don’t give away money. Offering a low rate upfront indicates that the finance provider expects to make a return on their investment in other ways. This article shares some ways finance companies make up for low rates.

I’ve worked with solution providers to implement finance programs and help them win deals for the past nine years. If a lease rate feels too good to be true, it might just be. I’ve learned there are four major  drawbacks of a low-rate decision to you and your clients, including:

  • Hidden Fees
  • Unclear End-of-Term Expectations
  • Compromised Service Levels
  • Less Accessibility and Longevity

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SOURCE GreatAmerica

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