Fire Truck Help

Fire Truck Help

Can we borrow money for a fire truck?

Will my fire department be able to borrow money to buy a new fire truck?

If you are unsure if your fire department is able to get a fire truck loan, this article will explain the factors that banks use to make a fire truck financing or leasing decision.

Here are the factors used to decide if you can borrow money for a fire truck

First, the you must be able to comfortably afford the payments.  That means you have enough money in your budget without scratching for every last dollar to make the payment. It’s not that you have so much budget, you don’t need to borrow.  It’s just that you have enough to pay and still have some money left over to handle the unexpected things that come up each year.

Here are 3 ways to know if you comfortable afford the payments:

If you have been saving or setting aside enough money each year in your budget to make the payment  OR  will have less expenses in the future (this usually means you’ve recently paid off a payment on a previous truck)  and can make the payments with the extra money  OR  will have new income (like a raise in contract funding or a new levy) that will provide enough to make the payment.

Second, the decision will be based on your money management history.  Does your department keep enough savings on hand for a rainy day fund?  Does your department have and use a budget to manage its money?  Have you been saving up for this purchase?  Does your department keep good and accurate financial records?

Finally, the decision will be based on the appropriateness of the financing term.  This means:  Is the department selecting a financing option that helps it meet its financial goals?  Will the fire truck be paid off before the end of its useful life?  Will the department be paid off by the time it needs to buy its next truck?

There is no big mystery if your department will be able to borrow money to buy a new fire truck.  If your department follows these common sense financial practices, you should be fine.