Wednesday, July 1, 2015

What's my motive?

I get calls from people who are suspicious about why I share the information I do on this website.   They tell me they can't find this information anywhere else and it is helpful but...

They wonder why I would tell fire departments how to save lots of money, avoid mistakes, and learn a lot more about fire truck financing.

Here's why I do this:


I have led a blessed life.  I have a job I love helping people who (for the most part) are kind, generous, helpful, and caring.  After all, they run into burning buildings for people they don't know.

So, I want to share what I know to help those people do what they do. 

I know that if they pay less interest, they have more money for gear or tools that will save them or someone else. 

I know that most people who call me have never done what they are doing (financing a big purchase) before.  I don't want them to be taken advantage of.  I want them to be informed buyers of fire truck financing.  I want them to know they are making the best decision for themselves.

That's why I do this.  Have a great and safe 4th of July.

Stay safe!
John R. Hill
President
First Bankers

Wednesday, June 24, 2015

What do banks look for when financing a fire truck?

Will my fire department qualify for financing a new fire truck?

That is a question I hear a lot.  And this article will explain the factors that banks use to make a fire truck financing or leasing decision.

Here are the things that banks look for

First, the decision will be based on your ability to meet payments.  That means you have enough money to comfortably pay the payment on the truck.  You should be able to demonstrate this ability by showing you have been saving enough money each year in your budget to make the payment  OR  will have less expenses (usually a payment on a previous truck that has paid off) going forward and can make the payments with the extra money  OR  will have new revenues (like a raise in contract funding or a new levy) that will provide enough income to make the payment.

Second, the decision will be based on how you handle your finances.  Does your department have enough savings on hand for a rainy day fund?  Has it been saving for this purchase?  Does it keep good and accurate financial records?

Finally, the decision will be based on the appropriateness of the financing term.  This means:  Is the department needing to finance their truck for 15 years when the truck has a useful life of 10 years?  Or, will the department get into financial trouble by financing the truck?  Debt can be damaging if not used properly.

Summary

There is no mystery how banks make decisions for fire truck financing.  It may seem that way but the decision is made on common sense financial principles.

Stay safe!
John R. Hill
President
First Bankers

Wednesday, June 17, 2015

Fire Truck Leasing - Things that matter #5

What's the first thing you ask when leasing a new fire truck?  What's the rate?

The rate is important but there are other things that are also important.  This series will help you understand and ask about all the things that matter.

Would you ever in your right mind do this?

When you've shopped for something, anything - what is the one thing you always do?  It's to check the price.  And you think about the value of what you are buying versus the price you pay.

But that is not the question you ask when buying financing.  You ask a different question.  You ask about the rate.

Things that matter #5 - Think cost, not rate

You've been trained to ask about rate by the financial world.  It's the first step in keeping you confused and off-center.  You've been taught that rate is the same as cost.  But that is way off.  That's why you get charged fees and have some type of settlement sheet with a bunch of numbers.  You reach the point where you just throw in your hands and think you got the best cost because you got the best rate.

Imagine learning you could save $10,000 by moving your payment a month.  Would you like to know that?  Or, save $20,000 by using the $20,000 you have in savings to borrow less?  Would that information help?

There is a 100% clear way to know and compare financing offers. It's called Total Borrowing Cost.  It shows you what you will pay - your cost - to borrow the money.  Rate is a part of it but it includes so much more.  And when you ask for the Total Borrowing Cost, you can be sure you are choosing the right deal for you.

Summary

You can get better information than just asking about rate.  And it will be easier and more clear way to compare your financing options.  It's called Total Borrowing Cost.  It's a way to ask about financing the same way you ask about everything else you buy in your life.

Stay safe!
John R. Hill
President
First Bankers

Wednesday, June 10, 2015

Fire Truck Leasing - Things that matter #4

What's the first thing you ask when leasing a new fire truck?  What's the rate?

The rate is important but there are other things that are also important.  This series will help you understand and ask about all the things that matter.

 

I know a way to make more money

Many departments have a false understanding of financing and therefore, make an expensive mistake.  It's the decision about how much money you should pay as a down payment.

Things that matter #4 - Borrow the right amount

It's always nice to see a big fat savings account.  But that feeling can lead to a fatal financing mistake.

Choosing the right amount to borrow is the biggest decision with the biggest repercussions.  Borrow too much (which means you leave too much in savings) and you pay a lot more interest. Borrow too little (which means you leave too little savings) and you risk a problem if something unexpected happens.

The right balance is to use enough savings to reduce your amount borrowed without depleting your savings to an unsafe amount.  That means you have enough savings for any future planned major purchases AND rainy day funds between 6 and 12 months of revenue.

Summary

The biggest thing you can do when leasing a fire truck is too borrow the right amount. It can mean the difference between paying thousands of dollars more or putting your department's finances in jeopardy.

Stay safe!
John R. Hill
President
First Bankers