Case Study: How One Department was Able to Replace a Truck Sooner than Planned


Department profile 
-  Northwest South Carolina fire department 
-  Must replace 1980s truck due to massive estimated repair costs 
-  Truck out of service 
-  Had loan with 3 payments left for last truck purchase 
-  Had planned on paying off last truck before replacing 1980s truck

Situation
The Department only had a budget for 1 payment. It desperately needed to replace the out of service truck that was first out for a less active, 2nd station. The plan was to nurse the old truck along while paying off the last truck loan. The truck had an unplanned, major mechanical failure which required a massive repair cost. The Department thought they would have to sink good money into the old truck or simply leave the truck out of service until they could buy a new truck.

Solution
The department learned about the Step Payment Option. This payment option allows smaller payments during the first few years and higher payments later when more funding is available in the budget.

In this case, the Department purchased the replacement truck now. The payments were based on the funding available from current cash savings and the current repair budget.

When the old loan is paid off in 3 years, the Department will pay a higher payment that matches the current budgeted payment.

Benefits
The Department received: 
- The new truck they needed now. 
- Lower upfront payments that fit into their current budget. 
- Did not waste money repairing an old truck. 
- Maintains same payment amount when old loan pays off.

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