Wednesday, April 16, 2014

Fire Truck Leasing: The biggest myth

Every single day fire departments waste thousands of dollars and financially hurt themselves because of a common myth


So, what is the myth?   That financing a fire truck is like financing anything else.

Most people who call have experience in financing a car or home.  And even that is confusing for most people. 

So, they think that financing a fire truck is all about the rate.  And that is true for cars and homes where you don't have many choices about how many years, whether to pay monthly or annually, what month to pay the payment, etc. etc. etc.

But financing a fire truck involves so much more

There are literally hundreds of options.  Each one can save or cost your department thousands.  Or do something to hinder your chances at buying the next truck. Or be surprised by some hidden cost or term down the road.

Summary

The biggest myth is that financing a fire truck is just like everything else.  It's not even close.  There are just too many potential options that can help or hurt your department.  Find someone you trust to help you walk through the options.

Stay safe!
John R. Hill
President
First Bankers

Wednesday, April 9, 2014

Fire Truck Leasing: Money saving ideas

Want some simple ways to save a lot of money on your next fire truck?

Most departments ask for a better rate.  And that's important but there are other ways to save much more money.

Here are 3 money saving ideas

  1. Reduce your financing term by 1 year.  Instead of 10 years, select 9 years.
  2. Increase your down payment by 5%.  The Return on this investment is huge.
  3. Schedule your first payment 6 months earlier.  Most departments fail to understand the importance of payment timing.

So, how much will these ideas save?

For a typical $300,000 fire truck, getting a  1/4% lower rate will save about $4,500.

By paying off 1 year earlier, you'll save over $5,000.

By increasing your down payment, you'll save over $6,000.

By scheduling your payment 6 months sooner, you'll save over $7,000.

Summary

Financing a fire truck is more complex than financing a car or home.  Those only have a few options.  Because more options are available when financing a fire truck, each option can either save or cost your department money.  It's important to know the key information.

Stay safe!
John R. Hill
President
First Bankers

Wednesday, April 2, 2014

Fire Truck Leasing: Common Expensive Mistake

Can someone actually lose money by saving it?

Well, one fire department almost did until they learned some important knowledge.

It's a common financial strategy that almost always loses money.  In this case, over $90,000

This fire department had a payment budget of $61,000.  But they wanted to have a payment of $50,000 and save the other $11,000 per year towards their next truck.

But doing this, the department had to extend a 9 year payment term to a 12 year payment term. 

If they financed their truck this way, they would save $132,000 in 12 years and would pay over $110,000 in total borrowing cost.

If they financed their truck over 9 years with the $61,000 payment, they would pay $70,000 in total borrowing cost.  This saves them $40,000.

Then, they could save the $61,000 for 3 years towards their new truck and would have $183,000 in savings - over $50,000 more in savings.

Summary

This financial strategy is like paying the minimum on your credit cards and putting the rest of your budget in savings.  Smart financial strategy always pays off debt first because it offers the highest return on investment.

Stay safe!
John R. Hill
President
First Bankers

Wednesday, March 26, 2014

Fire Truck Leasing: How to lower your payment by $1,000 without doing anything

Over the next few weeks, I'll share some real customer stories and how they learned to save money on their fire truck financing.

First, timing is everything

An Illinois was buying a new pumper for $574,792.  They had saved $165,000 for the purchase.  The had a $50,000 payment budget.  The truck would deliver in the department's next fiscal year.

The payment as they requested was $45,520.

So, how did they do "nothing" and still save money?

The department learned from us:

If they used the payment budget from the next fiscal year as an additional down payment upon the truck delivery, they could lower their payment.

By simply using their money more wisely, their payment was reduced from $45,520 to $44,378.  A savings of $1,142 per annual payment.

The department did nothing except change how they used their money.

Summary

Fire truck financing is very customizable and small tweaks can achieve big savings.

Stay safe!
John R. Hill
President
First Bankers