The Era of Cheap Money Is Over: The New Equation for Companies "Buy" or "Rent"?
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A company that could purchase 300 vehicles in one go in 2021 thinks twice before making the same decision today. What has changed is not the firm's appetite, but the cost of money.
After 2008, money was abundant, interest rates were low, and inflation was under control. However, the rules of the game changed after 2021. For the past three years, we have been trying to lower both interest rates and inflation; both are still high. Following the 2023 elections, an economic program based on more rational policies was put into effect. The plan was to bring inflation down to single digits within two years and then continue on our path with more confidence. That did not happen. The failure to take structural steps made it necessary to maintain consistently high interest rates in order to strengthen reserves and prevent them from falling back into negative territory. So much so that the policy rate rose above 50%, and above 60% on an annual compounded basis.
This picture may seem at first glance like a macroeconomic debate. In reality, however, its consequences directly affect corporate balance sheets, investment decisions, and fleet strategies. Below, we examine why money will not become cheaper again, how interest rates are reshaping corporate profitability, and why, in this environment, the difference between purchasing and leasing vehicles is no longer a matter of preference, but a financial decision.
Interest refers to the cost applied to money that is lent or capital that is invested. When interest rates are low, both individuals and companies can find credit cheaply. That credit is used to invest, purchase vehicles, and expand capacity. When interest rates rise, the equation is reversed.
Inflation and interest are two ends of the same rope: central banks raise interest rates to bring inflation down, but those interest rates affect everyone’s pocket. The clearest place where we see this is the credit card statement paid every month. In Türkiye, credit cards have now become used not to bring consumption forward, but to make it to the end of the month.
The same logic applies to companies. When access to cash becomes more limited, investment appetite stops first, followed by growth plans.
It is not possible to fit the last six years into a single picture. To understand the current reflexes of companies, we need to divide this period into three.
Immediately after the pandemic, large amounts of liquidity were injected into the markets. Companies borrowed very cheaply and spread their borrowing maturities over 7–10 years. Everyone found money. And when everyone found money, expenditures were made that we would not call “reasonable” today; it was a period when a company could purchase 300 vehicles at once. The same wave also misled individual investors: because all tides were rising, a generation emerged that made money whichever way it turned.
What that period left us with was not money, but a habit. For fifteen years, the phrase “I’ll buy it and somehow pay for it” always proved right. A generation of managers mistook this for knowledge. It was not knowledge; it was simply the period.
The Fed’s balance-sheet expansion policy led to an abundance of money globally. In Türkiye, monetary policy pursued alongside a policy of supporting the exchange rate turned inflation into a serious problem from 2021 onward. The rise in energy costs following the Russia–Ukraine war brought not only Türkiye but also the US and Europe to the threshold of inflation in 2022.
This is where we have arrived today: both interest rates and inflation are high, and neither is coming down quickly. And the critical question here is: is it possible to go back?
Whether the Fed, the European Central Bank, or the Central Bank of the Republic of Türkiye cuts or raises interest rates, the essence of the picture does not change: the days when the cost of money was zero are behind us.
Moreover, this is not only a matter of monetary policy or inflation. The fact that budget deficits are increasing all over the world is structurally pushing up the cost of money. The continuation of budget deficits in the US means that pressure on interest rates in long-term bonds will continue.
For companies, the planning horizon is this clear: the coming period should be designed as a period in which capital is expensive.
The following figure shows the impact of the new era on companies most strikingly: interest paid in 2024 was TRY 3.4 trillion, while dividends distributed were TRY 3.25 trillion. Normally, a company’s partner is its shareholder. At the point we have reached today, interest has effectively become the company’s partner.
Does this mean that production will stop? No. High interest rates do not stop production; they make production unable to compete with financial returns. A company can invest its money at interest, and after deducting withholding tax from the return against expected inflation, it can achieve a net return close to 15%.
The real question is this: which company can achieve a return of around 15% per year on the capital it has invested by getting its existing cash flow in order? This currently does not seem very possible for most sectors.
This is why agile and creditworthy companies are turning to cash on the one hand, and channeling this cash into short-term returns instead of investment. They are not giving up on production; but they are waiting through a period in which production cannot compete with financial returns.
During the era of cheap money, companies were investing and purchasing assets because money was very cheap. As the cost of money increases, the reflex is reversing.
Today, the priority is to preserve equity. You may need to keep some of the cash you have in interest-bearing instruments in order to protect it against inflation. But the main issue is this: you cannot use scarce resources as wastefully as you used to.
This is exactly where the difference between purchasing and leasing ceases to be a matter of preference and becomes a financial decision.
When you purchase a vehicle, you tie up your capital in a low-liquidity, depreciating asset. Considering the alternative return that the same capital can generate in today’s environment, the cost of tying up that capital is much higher than before.
Operating leasing changes this equation under five headings:
In other words, the question is no longer, “Should I buy a vehicle?” The question is this: Should I tie up this capital in a vehicle, or should I acquire the right to use the vehicle and keep the capital in my business?
The era of cheap money is over in the world; in this new era, both individuals and companies are facing a significant interest burden. In an environment where capital is expensive, every purchasing decision is also a decision to give something up: where else could you have put that money? On the fleet side, this calculation is particularly sharp because a vehicle is both a significant expense item and a depreciating asset.
The real issue now is to direct capital to where it will provide the greatest benefit. You can watch the episode The Era of Cheap Money Is Over, where we discuss this topic together with economists, on the Hedef Filo YouTube channel.
