Fire Truck Refinancing: How to blow a lot of money

The primary goal of refinancing your fire truck lease or loan is to save money. And if you measure the wrong things, you may end up paying more.

Let's hear the story of fire department who got a lower interest rate but paid a lot more money.

• The department owed about $702,000 on an aerial.
  
• They had 14 years remaining and the interest rate was about 5.0%.
• The department received an interest rate to refinance the aerial at 3.01%
• The department wasted over $62,000 by refinancing.

Here's how the department wasted so much money

• The department had to borrow $770,000 to include all the fees and costs.
• The department had to pay higher payments and reduce the term to 9 years. That was the only way to achieve "savings" as calculated by the refinancing bank.

Summary
If you don't do financial transaction every day, you can easily fall into a trap. It's where someone gets you to focus on the wrong thing - like interest rate - but miss the bigger picture.

Next week, we'll show how this department could have achieved their goals and saved up to $62,000.

Stay safe!
John R. Hill
President
First Bankers
www.FirstBankers.net
www.FireTruckHelp.com

Fire Truck Leasing: How to save money - Part 7

Most departments get the wrong information in trying to save money for a lease or a loan for their fire truck.
They want to know how to save $$$ but they only ask about the %.

We advised that Total Borrowing Cost is the best method to compare financing offers.
Now, how do we use Total Borrowing Cost to save money?

All facts are not the truth
Everyone knows to ask about the interest rate, but can you name all the legally allowed methods of calculating interest? And how much cost these different methods affect your cost?

Probably not.

There are a lot of interest rate games out there and most fire departments lack the experience to ask the question or even understand the impact if the information is shared with them.

I see fire departments every day waste thousands because they don't understand these games that can legally be played.

Sometimes, the rates are calculated to have the appearance of a lower rate - say daily compounding. Other times, the rate is a variable rate and the fire department does not understand the risk and terms of the rate.

Summary
While it seems natural to ask what the interest rate is, the truth is that you will receive inconsistent facts. Making a decision on flawed data like this leads to major, costly mistakes. T

That is why Total Borrowing Cost - a real number that can't be faked is the best measurement to compare fire truck financing offers.

Stay safe!
John R. Hill
President
First Bankers
www.FirstBankers.net
www.FireTruckHelp.com

Fire Truck Leasing: How to save money - Part 6

Most departments get the wrong information in trying to save money for a lease or a loan for their fire truck.
They want to know how to save $$$ but they only ask about the %.

We advised that Total Borrowing Cost is the best method to compare financing offers.
Now, how do we use Total Borrowing Cost to save money?

Timing is everything
I'll let you know the smallest tweak with a large bang in saving money. No one ever asks about it and no other banks will tell you about it. After all, if they did, you'd pay less money!

Time your payment(s) each year with when you receive your money. That means if you receive your tax levy or contract annual funding in March, schedule your annual payment in March.

If you receive you receive your money monthly, pay monthly.

When you pay at the wrong time (like September, not March) or wrong frequency (annually, not monthly), you will pay excess interest.

Every single day, I get calls from departments who will take delivery in September so they want their annual payment in September, for example.

When, as the example above shows, that they receive their funding in March. So, they get money in March, it sits around for 6 months (while interest on the fire truck loan is accruing) and the payment is made in September.

Here's how much that costs
For a $300,000 truck financed over 10 years, simply aligning your fire truck lease payment with the funding timing will save over $6,000.

That means your department overpaid because you never thought about the timing of your payments and income.

Summary
This is the easiest way to lower your fire truck borrowing cost. By timing your payments with your income, you will save money. Lots of it -- and without any budget hardships.

It's the easiest free money you'll ever find.

Stay safe!
John R. Hill
President
First Bankers
www.FirstBankers.net
www.FireTruckHelp.com

Fire Truck Leasing: How to save money - Part 5

Most departments get the wrong information in trying to save money for a lease or a loan for their fire truck.
They want to know how to save $$$ but they only ask about the %.

We advised that Total Borrowing Cost is the best method to compare financing offers.
Now, how do we use Total Borrowing Cost to save money?

Time IS money.
Almost all fire departments request 3, 5, 7, or 10 years to finance their fire truck. They are not aware how time can dramatically reduce their Total Borrowing Cost.

Here's how to save money
Reduce your financing term by 1 year. It usually increases the payment about $1,000 for every $100,000 borrowed but saves thousands of dollars in interest.

In other words, instead of a 10 year fire truck financing term, finance over a 9 year term. Your payment will be slightly higher BUT you will lower your borrowing cost by about 10%.

That means instead of paying $60,000 in borrowing costs, you'll pay $54,000.

Summary
The 2nd largest way to lower your borrowing cost after reducing the amount you borrow is to reduce how long you finance your fire truck. Small changes (just 1 less year) will add up to large savings.

Stay safe!

John R. Hil
lPresident
First Bankers
www.FirstBankers.net
www.FireTruckHelp.com