6 Ways to Navigate Rising Interest Rates for Asset Finance

This year has seen record breaking interest rate rises, with the Bank of England announcing thirteen base rate increases in a row. This can make asset financing a difficult task, so companies must adapt their financial strategies to the changing environment.

Although the general view on rising interest rates is negative, there can be benefits when teamed with smart financial decision-making.

We’ve collated six essential ways to navigate rising interest rates when looking for asset finance options to help you stay ahead and make better decisions.

Monitor and forecast interest rate trends

There is currently an apparent upward trend in interest rates with a record breaking 13 rises in a row. However, it is bound to stabilise and come back down at some point.

The Monetary Policy Committee regularly meet to discuss interest rates, uploading summaries of discussions and what they assume for the future here. Make sure to keep up with what has been discussed and look into the opinions of news outlets and financial experts to give yourself the best chance of making an accurate forecast.

Being able to make an accurate forecast will give you the power to make a more informed financial decision and avoid any negative surprises.

Refine your financing strategy

How you refine your financing strategy will come down to what your strategy is, but some general points that will help you are:

  1. Alternative financing options: Certain financing options can provide far more stability in a time of rising interest rates, such as fixed rate loans. A fixed rate contract will ensure that rising interest rates will not impact the amount of interest you pay on your loan, as the interest legally cannot change until the end of the contracted period.
  2. Longer-term contracts: Although long term contracts come with a slightly higher interest rate, they are generally locked in and done in a fixed rate style, so interest fluctuations will not affect your payments. This approach can be especially useful when financing assets that have longer lifecycles, as the loan term is more aligned.
  3. Refinancing opportunities: If you can predict that interest rates are likely to continue rising, refinancing before interest rates rise any further can be a strategic move. This can be a cost-effective way of raising cash for your business.

Improve your financial position

Try to take measures to improve your financial position, such as strengthening your creditworthiness with a better credit score, reducing outstanding debt as much as possible, improving your cash flow management etc. Even in a high interest environment, lenders will be far more inclined to give you favourable loan terms with a healthier financial position as well as providing you with more power to negotiate those terms. We work with several companies who will assist in assessing and improving your credit score – contact us to find out more.

Assess your overpayment options

Overpayments are an effective way to tackle the challenges of rising interest rates. It is worth checking with your lender about the ability to make overpayments at any point during the contract’s duration. This enables the borrower to reduce the principal amount and consequently reduce the impact of higher interest rates.

Certain lenders go a step further by permitting a full early repayment without any significant settlement penalties. This provides greater financial manoeuvrability and can be extremely beneficial in a time of high interest inflation.

Optimise your asset selection

Focus on the most critical assets that will provide the highest long-term value with steady returns. As you will be paying more on interest, countering it by maximising your return on investment (ROI) per asset is important.

Once you have determined which assets will provide lower returns and are less necessary, wait until interest rates reduce to make sure that you are profiting from all your asset investments while only purchasing what you really need at that time.

Communicate with your lenders

Building and maintaining strong relationships with lenders is essential. Stay in regular contact with your lenders, keeping them informed about your financial performance and discussing any potential adjustments or refinancing options that could be favourable. Open communication fosters transparency and allows you to explore mutually beneficial solutions that can help navigate the impact of rising rates effectively.

By implementing these strategies, you will be able to navigate the financial landscape with more confidence. At Full Metal Finance, we understand the intricacies of asset finance in a dynamic market. We tailor our comprehensive range of financial services to your needs and help you to get the best possible deal from our list of over 70 lenders. Just take a look at what other people are saying about us to get an indication as to why we are right for you.

Don’t wait any longer, take control of your asset finance journey with FMF; get in touch with us today.


Annual Percentage Rate (APR)

APR, or Annual Percentage Rate, is a percentage term that represents the annual cost of borrowing money, including the interest rate and any additional fees or charges associated with the loan.

Appraisal in Construction

An appraisal is the process of determining the value or worth of a property, asset, or item, generally done by a professional appraiser.

For example, if you want to buy a second-hand excavator, you can expect an appraisal to be done so the seller can price it accurately.

Asset Finance

Asset finance is a financial agreement between a company/individual and a financial institution/leasing company, whereby an asset is initially paid for by the financial institution/leasing company and the company/individual then makes regular payments to them over a specified period.

There are three main types of asset finance: Hire purchase, finance lease and operating lease.

Balloon Payment

A balloon payment is a lump-sum payment due at the end of a loan term or lease agreement.

The term “Balloon” comes from the significantly larger payment than the regular periodic payments made throughout the loan/lease period.

Business Financing

Business financing refers to the many methods and sources of obtaining funds to support the operations, growth, and investments of a business.

Some examples of these methods would be: Cashflow funding, invoice financing, and refinancing.

Cashflow Funding

Cashflow funding (or cashflow financing/lending) is a method of financing focusing on a business’ ability to generate cash flow, rather than relying solely on its assets as collateral.

It provides short-term capital based on expected future cash flow of the business.

Construction Finance

The specialised financial arrangements used to fund construction activities, such as infrastructure, construction equipment, or other construction related expenses.

There are many methods gaining construction finance, visit our products page to see what we can offer: https://fullmetalfinance.com/pages/finance-products

Contract Hire

Contract hire is a method of renting a vehicle for a fixed period under a contractual agreement. It is a popular option for companies and individuals that don’t want to commit long term to the ownership of a vehicle.


Demolition is the process of safely and systematically dismantling or demolishing existing structures, buildings, or infrastructure. It is generally conducted to make way for a new construction, renovation, or land development.

Down Payment

A down payment is a payment made upfront by a buyer as part of a larger purchase or financing agreement. It is usually calculated as a percentage of the total purchase price/loan amount.

Finance Lease

A finance lease refers to a long-term lease agreement allowing a company to acquire and use an asset for a significant portion of its useful life. At the end of the lease term, the lessee will return the asset to the lessor or pay a peppercorn rental to retain use of the asset.

Hire Purchase

Hire purchase is a type of financing arrangement that allows an individual or business to acquire an asset through an instalment payment plan. The buyer takes immediate possession of the asset while paying for it in instalments over a specified period. The ownership of the asset is transferred to the buyer once all the payments, including any interest or fees, are completed.

Invoice Financing

Invoice financing is a financial arrangement whereby a business uses its outstanding customer invoices as collateral to obtain immediate cash flow. These invoices are generally sold to third-party finance companies at a discounted rate.

Loan term

A loan term refers to the length of time over which a loan agreement is structured to be repaid.


Refinancing is the process of releasing the equity from assets you own outright (or have more than 50% ownership), structured on a hire purchase or finance lease basis.

Refinancing can also replace an existing loan or debt obligation with a new loan that has different terms and conditions (generally more favourable).

Secure Loan

A secure loan is one that is backed by collateral (an asset pledged by the borrower to the lender as security). The collateral acts a security in the case that the borrower fails to repay the loan.

Unsecure Loan

An unsecured loan is a type of loan that is not backed by collateral or assets. Unlike secured loans, unsecured loans are granted based on the borrower’s creditworthiness, income, and ability to repay, rather than requiring the borrower to pledge specific assets as security.

Vehicle Finance

Vehicle finance refers to the various financing options available to individuals or businesses to purchase or lease vehicles. It provides a way for people to acquire a vehicle without paying the full purchase price upfront. Vehicle finance can be obtained through banks, financial institutions, or automotive dealerships.