Wednesday, June 21, 2017

Fire Apparatus Grants: How they harm you

Have you trained your local leaders to not buy new fire trucks?

If you've promoted the idea of a grant to buy needed apparatus, you probably have.

When leaders start to think that someone else will buy the truck you need, they will always defer the purchase.

That creates a problem

When leaders defer the purchase and budgeting decision, your trucks can get older and older as you wait (and hope) for a grant.  So, your trucks become more unsafe. Meanwhile, you've trained your leaders that they don't have to buy anything, just hold out for a grant that may or may not arrive.

What to do instead

Build a financial justification case to show that buying a truck makes sense even if no grant is available to pay for it.

And that means comparing the cost of buying versus not buying.  You can get a free tool to help build your case at FirstBankers.net/Justify.

Summary

Don't give your leaders a chance to avoid the hard decision of buying a modern and safe fire apparatus.  While grants are great when you get them, they can actually harm your department as your leaders force you to wait for years to buy the truck you need.


Stay safe!
John R. Hill
President
First Bankers

Wednesday, June 14, 2017

Financing Fire Apparatus: What you don't know about interest rates

If you finance a fire truck, you'll spend between 10% and 50% of the truck price on financing cost.

What can you do to make sure you're not wasting any money unnecessarily?

Over the past few weeks, I've written about ways to save money when financing a new fire truck.  And there is no topic more confusing or got more questions than calculating interest rates.

Here's a way to see for your self why just asking for an interest rate does not help you.  This website has a interest rate calculator which shows the many ways you can legally calculate interest rates.  So your "interest rate" can be very different among different lenders.

See the website here:  https://www.lakecitybank.com/tools-calculators/compound-interest-calculator/

 

There is only one way to know and save costs when financing a fire truck.

It's knowing Total Borrowing Cost which is how much you will pay in dollars.  There is no way to game how many dollars you pay.  And when you know about all the ideas I've provided over the past few weeks, you'll know what to ask and know how much it costs.

Summary

Don't get fooled.  If you are asking only "what's the rate", then you've already set yourself up to fail.  The modern way is to understand your Total Borrowing Cost, which is the amount of money you'll pay in dollars.



Stay safe!
John R. Hill
President
First Bankers

Wednesday, June 7, 2017

Financing Fire Apparatus: Money Saving Idea #6

If you finance a fire truck, you'll spend between 10% and 50% of the truck price on financing cost.

What can you do to make sure you're not wasting any money unnecessarily?

Be aware of the costs and fees

If you only compare interest rates, you can set yourself up to pay more even if you choose the lowest interest rate.

Because costs and fees are the finance world's way of getting more money without disclosing it in the interest rate. I've seen many creative ways of imposing and collecting fees.  Both upfront and at the end.

And don't just take the person's word for it.  The contract can say one thing even if the person you are dealing with says something completely different.  So read the fine print... especially the fine print that says the lender can change the terms and costs later on. 

Summary

Fees and costs are another way to make more money from you without calculating it in the interest rate.  Be sure to understand what fees and costs are charged, can be charged, or could possibly be charged in the future.

Stay safe!
John R. Hill
President
First Bankers

Wednesday, May 31, 2017

Financing Fire Apparatus: Money Saving Idea #5b

If you finance a fire truck, you'll spend between 10% and 50% of the truck price on financing cost.

What can you do to make sure you're not wasting any money unnecessarily?

Know the interest rate games

Are all interest rates the same?  The answer is No.

Interest rates can vary by how they are calculated (called compounded in banking language), by how they are applied, and by games that some people will play on unsuspecting borrowers.

Here's what you should know:

  1. How rate is calculated:  Is the interest compounded daily, monthly, annually?  That means how often interest is added to interest.  If daily, the interest is added daily to the previous daily balance which includes the interest from the day before.  The difference in compounding can add up to a 1/4% difference.
  2. How interest is applied:  Is the interest rate calculated on exact days or a 360 day year? This small trick can add lots to your borrowing cost.
  3. Interest rate games:  Are you quoted an annual payment but pay the payments monthly?  This is just one of several interest rate tricks pulled on unsuspecting borrowers.

Summary

If you just look at interest rates and think you are getting apples to apples comparison, you may be fooled.  Be sure to understand the games that lenders can pull on you.


Stay safe!
John R. Hill
President
First Bankers