Wednesday, December 13, 2017

Fire Truck Financing: The Frequently Asked Questions

Fire truck financing is more complex than car or house financing

Over the next few weeks, we'll share what you need to know.

 Here's the questions that are always asked:

  • What's the interest rate?  Many people don't know that rate can be legally calculated several different ways.  Also, fees and costs are not included in the rate.  This is a good question but misses some key information.
  • Can we prepay early? Yes, you can.  Sometimes a fee is charged and sometimes not.  There is an unspoken strategy behind this question that always fails to accomplish the goal - read more here.
  • What is the process?  The process for financing a fire truck is largely determined by Federal and State laws.  Your banker should be knowledgeable about them and help you comply with them.
  • How long does it take? The process usually takes 2-3 weeks, mostly due to complying with the laws.

Summary

Sad to say, these are the questions that most people ask.  Next week, we'll share the SAQ's (Should ask questions).  The questions that will really help you and your department.

Stay safe!
John R. Hill
President
First Bankers

Wednesday, December 6, 2017

Fire Truck Financing: The Decisions

Fire truck financing is more complex than car or house financing

Over the next few weeks, we'll share what you need to know.

You'll make a few more choices than when financing a car or house.

Or, at least, you should be asked to make these choices.

When you choose right, you'll save money and it'll be easier on your budget and cash flow.

Here are the choices you should be making:

  • Down payment.  How much are you contributing to the purchase upfront? A larger down payment means borrowing less and paying less. 
  • Financing Term.  How long will you take to repay the loan?  Less years means paying less.  There is no standard term like a 5 year car loan or a 30 year mortgage.  This choice has a large impact on how much you pay in total borrowing cost.
  • Payment Frequency.  How often do you want to pay each year?  Monthly, quarterly, semi-annually, or annually.  Unlike cars or houses, monthly payments do not necessarily save money.
  • Payment Timing.  When do you want to pay your payment? And when do you want to start making payments.  This decision has a huge impact on your costs with little to no change in payments.
  • Interest Rate.  Do you want a fixed rate or variable?  Or a combination of both?  How is the rate calculated?  Hint: it can be calculated several different ways.  Knowing this will help you avoid a major mistake.
  • Fees & Costs.  Should you pay a fee for a lower interest rate?  Know how to do the math to determine your best deal. Or what other fees and costs are you willing to pay?

Summary

Don't let your banker make these choices for you. When you know what you can choose and how to know the best choice for you, your fire department will be financially stronger in the future.



Stay safe!
John R. Hill
President
First Bankers

Wednesday, November 29, 2017

Fire Truck Financing: The Terms


Fire truck financing is more complex than car or house financing

Over the next few weeks, we'll share what you need to know.

The words you will hear when you finance your new fire apparatus

Every industry has its own terms.  Sometimes because it's easier and sometimes to confuse its customers into buying more than they need.  We'll look at a few of the most common fire truck financing terms:
  • Financing Term:  This is the amount of years you've committed to financing your fire apparatus.
  • Lease Purchase Agreement:  This is the typical contract used for fire truck financing.  It is not a "lease" like a car lease where you return the truck after so many payments.  It's 99% like a loan with the only difference is you can cancel the agreement each year.
  • Down Payment:  This is the amount you're paying upfront towards the truck price to reduce your payment and interest costs.
  • Frequency:  This is how often you pay your payment.  It can be once a year, twice a year, quarterly, or monthly.  You can choose the frequency to best fit your situation and to reduce your borrowing cost.
  • Interest Rate:  This is the rate at which your interest amounts will be calculated.  Note that interest rates can be calculated differently and may not include other costs and fees charged outside of the interest cost.
  • Total Borrowing Cost:  This is the total of what you pay for the service of financing your new fire truck.  It includes all interest and other fees and charges.

Summary

When you know the lingo, you'll be a much smarter buyer.  Don't get fooled and pay too much.

Stay safe!
John R. Hill
President
First Bankers

Wednesday, November 22, 2017

Happy Thanksgiving

I have had the honor and pleasure to spend another year working with the fine men and women who sacrifice their time and talents to keep their communities safe.

A big thank you to all who serve.

Stay safe!
John R. Hill
President
First Bankers