How do I avoid making a financing mistake?The problem is most people have not financed many fire trucks in their lives. So, they may not be aware of what mistakes can be made. Let alone, if they are making one.
What are the common fire truck financing mistakes?
- Selecting the wrong term (or repayment period). This means too short or too long. Too short means you use too much of your budget for the payment and don't have enough extra for contingencies. Too long means still paying on a truck that is also starting to need repair costs or beyond its useful life.
- Selecting the wrong down payment. If you pay too large a down payment, you drain your rainy day funds and may be in trouble in an unexpected event. If you pay too little, you pay too much for borrowing costs.
- Paying too much. It's easy to focus on the rate but miss other information that adds to your borrowing costs. And it's more than fees. As an example, timing of payments during your budget year is a small tweak that saves thousands of dollars. Yet most departments don't ask and miss this opportunity.
- Don't set up apple to apple comparisons. As mentioned above, borrowing cost is more than just the interest rate. Yet most departments look at different offers and compare rate. Total Borrowing Cost is a comprehensive and modern method to compare financing offers. Request that information and you'll be amazed how easy it is to compare different choices.
No one likes to make a mistake. And financing mistakes are mistakes that take years to show up. It's important to prepare yourself to avoid common financing mistakes.
John R. Hill