IBM Lowers Interest Rates on Low Rate Financing Deal

Published: November 15, 2006

by Timothy Prickett Morgan

Big Blue is jerking around the interest rates on its Low Rate Financing deal again, and this time, it is lowering the rates it is charging to finance IT hardware, software, and services so it can boost sales in the fourth quarter.

On September 19, IBM raised the financing rates on the Low Rate Financing deal for the second time in 2006, and now the rate has gone down. Interest rates have, by the way, been more or less stable during this time, so IBM is clearly using its ability to borrow money very cheaply to help customers finance gear, and therefore make a sale.

Effective November 1, IBM is charging 4.8 percent for the financing on hardware, 5.1 percent on software and business consulting services, and 6.1 percent on integrated technology services within the United States. (Rates are lower in Canada.) Customers can finance IT acquisitions with value ranging from $1,000 to $1 million in the United States and from $25,000 to $1 million in Canada. Customers buying System p5 Unix and Linux boxes can finance up to $2 million in the U.S. or Canada under the low rates. The deal also applies to customers in other parts of the Americas region. These rates apply to customers who have IBM's Best Plus rating, which means they can probably afford to do their own financing or buy gear; IBM is offering 24-month or 36-month leases with a $1 end-of-lease purchase option (meaning, you own it when the payments stop).

If history is any guide, IBM will drop rates even further if IT sales stagnate in late November or early December, and will say that the deal expires on December 31 to get people to move. Then, when sales stagnate in the first quarter, lo and behold, the Low Rate Financing deal--or something very much like it--will come back into the catalog again.

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