Wednesday, February 15, 2017

Why every single fire department should have a budget

In my business, I talk to a lot of fire departments.  And it always shocks me...

That so many fire departments operate without a budget.

There are big differences between the budget haves and the budget have-nots

The haves almost always have more resources and funds available.  And it's not because they are in "rich" areas.

It's because they can show how they are good stewards of their resources to the people that fund them - whether a local government or the community at large.

They also know what it takes (money-wise) to do a good job.  So, when they ask for money, they can back up why they need the money they are requesting.

Finally, they can better manage their department and know when they are on track or off track.  And how to make adjustments as unexpected events happen.

Summary

If I see 1 difference between the departments, its the difference between the budgeters and non-budgeters. And the fire departments with budgets almost always have better equipment, more resources, and less stress.



Stay safe!
John R. Hill
President
First Bankers

Wednesday, February 8, 2017

How to calculate cost of a 0% fire truck loan

Last week, we showed that a 0% loan does cost something

This week, we'll show you how to calculate how much it really does cost.

 

First, why bother?

Because it's not free... and you may get a better deal somewhere else.  The 0% interest rate has been a standard sales gimmick for many decades.  It's goal is to make you focus on the interest rate ("it's free") and the payment rather than the cost of the product you are buying. You are buying 2 things - a fire truck and financing.  When they are combined, you lose sight of the cost of each.

The key is to understand the true cost so you can see if you can get a better deal.

How to calculate the cost of a 0% interest rate

It's pretty simple.  Just ask for the cash price.  If it's the same, compare the truck cost with comparable fire trucks.  You'll find it will be higher because the financing costs are built into the price of the truck.

When you get the cash price (because you don't need to buy financing), you can use many online tools to see how much financing cost was built into the payment.  If you can't find a tool, email me and I'll send you a print out.

 

Summary

A 0% interest rate is not free.  Not on beds, cars, furniture, or fire trucks.  It's a sales gimmick to bundle two services to hide the cost of one and provide the illusion of a free deal on the other.

Stay safe!
John R. Hill
President
First Bankers

Wednesday, February 1, 2017

0% Fire Truck Loan- Debunked

Cars, mattresses, furniture... and now fire apparatus

You see "free" financing offers for 5 years in advertising.  It seems like a good deal.

So, is it really 0%?

No.  Let's think about this for a second.  Why would a lender offer 0% and earn nothing when they could invest in something as bland as government bonds and earn over 2% right now?

The answer is that they wouldn't.  Lenders are in the business of making money and choosing to not make money would not sit well with the bosses.

So, how does the 0% interest rate really work?

It's simple.  The cost of financing is added upfront to the price of the mattress, car, or fire truck. Or is added to the balloon payment at the end.

That means a $500,000 with a real fire truck price will have a sticker price of $535,000.  

Your payment will be 0% on the higher sticker price of $535,000. Or, the same payment as 2.3% on the real price of $500,000.

You don't pay interest but you do pay for financing.

Summary

The manufacturers are always coming up with gimmicks to sell fire trucks.  But this website is focused on cutting through the fog of these offers.

Nest week, we'll share how to learn what the true cost of financing is.


Stay safe!
John R. Hill
President
First Bankers

Wednesday, January 25, 2017

Fire Apparatus Manufacturer Consolidation - The cons

In 2016, two major fire truck manufacturer mergers were announced.

This is only the beginning of a wave to impact the future of fire apparatus manufacturers.

There are drawbacks to consolidated industry

Any disruption of an industry, like consolidation, will have drawbacks, too.

The drawbacks to fire departments are:  
  1. Less choice.  If you aren't impressed with the final manufacturers left standing, you will be forced to choose from a group you may not like.
  2. Less personalization.  The reason for consolidation is to make an industry more efficient.  And that means more apparatus built for efficiencies reasons rather than customer reasons.  The fire truck business will become more like the auto industry.  A few models with different levels of features but no one will build a truck just to your specifications.  And this exacerbates the drawback of less choice.
  3. Higher prices. "Wait, just last week you said that consolidation will help lower prices because larger manufacturers will have more buying power."  True, but, with less competitors, there will be less reason for manufacturers to pass along those savings to customers.  Fewer manufacturers means less bids and higher prices.
  4. Even fewer competitors.  As the "big" get bigger, they will have more resources that the "smalls" just can't keep up with.  So, many small manufacturers will go out of business.

Summary

Like any change, fire apparatus manufacturer consolidation will bring pluses and minuses.  Eventually, the changes will become the new normal and people won't remember what it was like having 6-10 major fire truck manufacturers.  Until that time, the industry will be in a fair amount of turmoil.

Stay safe!
John R. Hill
President
First Bankers