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Old 07-15-2015, 08:56 AM   #1
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Long Wait for Trailer but Great US->CAD Exchange Rate

This isn't a very exciting topic but it affects all of those who have a long delivery wait and I'm guessing that this is a pretty common situation now that ETI's production schedule is so far out.

We have a 21 on order for April 2016. I've been watching the US->CAD exchange rate and am wondering how others are trying to hedge and minimize risk as far as final payment to ETI.

Options include:
1) Waiting till final payment is due and just dealing with whatever rate is in effect at that time. Downside is that rates are currently at historic lows (.78 - .79) and will "probably" be higher in the future. Difference could amount thousands of $$$.
2) Sending a big wad of cash to ETI far ahead of delivery. Upside is you capture good rate, downside is you incur risk because of the wait (heaven forbid something bad happens in BC or at ETI).
3) Using something like Currency Shares FXC (CurrencyShares - FXC). Upside is you take advantage of current favorable rate and minimize risk waiting for delivery of the tangible good your are purchasing. Downside is paying income tax on whatever "earnings" you'd capture when you sell (if CAD dollar goes up). Obvious downside is the risk that the CAD dollar really tanks.... however, it is at historical lows.
4) Walk into Canadian Bank, open an account and transfer from US. Hard to do if you don't live close to Canada.

I'd be interested in what others are thinking and doing. Full disclosure: I'm an engineer and can't help myself obsessing over this kind of stuff Must...... find.......optimum solution!

Thanks!
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Old 07-15-2015, 10:46 AM   #2
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I'm also an engineer and obsessive about that sort of thing, as well.

The interest rate on my savings account was pathetic, the exchange rate was as good as I've ever seen, so I sent a $30,000 personal check 6 months early. Worked just fine for me, though I'd use something trackable if I ever did it again (heaven forbid). Two weeks in USPS never-neverland was an itty bit stressful.

The 12 month wait kinda implies that ETI will be around a while (to me).
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Old 07-15-2015, 10:51 AM   #3
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I track international currency, it's part of my job. CAD is now 77 cents...
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Old 07-15-2015, 10:58 AM   #4
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Originally Posted by huskersteffy View Post
4) Walk into Canadian Bank, open an account and transfer from US. Hard to do if you don't live close to Canada.
Can you not open a Canadian account through your own bank? I know I have a US account set up by my Canadian bank rep, as well as a US credit card as it saves a bit of exchange fees as opposed to using my Canadian card. I dumped a bunch of cash in it back when it was near par, as I knew we were planning that Alaska trip we took last month. Saved a fair bit of money.

On the other hand, I would not worry too much about putting a deposit with Escape. Pretty sure they are on solid financial ground.
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Old 07-15-2015, 11:14 AM   #5
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The interest rate on my savings account was pathetic, the exchange rate was as good as I've ever seen, so I sent a $30,000 personal check 6 months early.
I did the same thing. Actually I did a wire transfer from Schwab in Canadian dollars. I just couldn't resist the exchange rate.
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Old 07-15-2015, 11:26 AM   #6
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I prepaid both my Escapes and was able to take advantage of a cancellation and get one earlier than anticipated, something you may not be able to do if you still have a large balance due.
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Old 07-15-2015, 11:31 AM   #7
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Quote:
Originally Posted by huskersteffy View Post
This isn't a very exciting topic but it affects all of those who have a long delivery wait and I'm guessing that this is a pretty common situation now that ETI's production schedule is so far out.

We have a 21 on order for April 2016. I've been watching the US->CAD exchange rate and am wondering how others are trying to hedge and minimize risk as far as final payment to ETI.

Options include:
1) Waiting till final payment is due and just dealing with whatever rate is in effect at that time. Downside is that rates are currently at historic lows (.78 - .79) and will "probably" be higher in the future. Difference could amount thousands of $$$.
2) Sending a big wad of cash to ETI far ahead of delivery. Upside is you capture good rate, downside is you incur risk because of the wait (heaven forbid something bad happens in BC or at ETI).
3) Using something like Currency Shares FXC (CurrencyShares - FXC). Upside is you take advantage of current favorable rate and minimize risk waiting for delivery of the tangible good your are purchasing. Downside is paying income tax on whatever "earnings" you'd capture when you sell (if CAD dollar goes up). Obvious downside is the risk that the CAD dollar really tanks.... however, it is at historical lows.
4) Walk into Canadian Bank, open an account and transfer from US. Hard to do if you don't live close to Canada.

I'd be interested in what others are thinking and doing. Full disclosure: I'm an engineer and can't help myself obsessing over this kind of stuff Must...... find.......optimum solution!

Thanks!
We did final large payment at the end . Our take on it - it is what it is . The day you pick up your trailer you will forget all this . Seeing your trailer finally will be all that consumes your thoughts . It is one happy day . Pat
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Old 07-15-2015, 11:32 AM   #8
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Pretty much same as Sturski, sent a personal check as soon as I finalized the build sheet, which is just before your trailer goes into production. The remaining $2-$3k went on plastic just before completion so I could get the final paperwork and get started on getting it registered.

Been watching finance long enough to know that my crystal ball has no idea what the future will bring.
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Old 07-15-2015, 12:26 PM   #9
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I did the same thing. Actually I did a wire transfer from Schwab in Canadian dollars. I just couldn't resist the exchange rate.
I did wire transfers in US dollars. The exchange rate I got from ETI's bank was 4 cents more per dollar that the transfer rate that I would have gotten if I had sent Canadian dollars.

A penny difference in the exchange rate doesn't sound like much but on $30,000 US dollars, one penny difference is $300 US dollars.

In our case the 4 cent difference saved us $1,200 US dollars.

That said I have no idea how you could time the exchange rate. For us it was just luck.

Grant
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Old 07-15-2015, 12:40 PM   #10
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Another exchange option

If you have or care to open an account with Charles Schwab, they offer international accounts which allow you to hold cash in several foreign currencies, one of which is the Canadian Dollar. I think their exchange rate is also very fair. I have not looked in to all the details but plan to as I get closer to ordering. From what I have read, however, most pundits do not expect the Canadian dollar to drastically improve for the rest of this year, but one can never be sure!
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Old 07-15-2015, 01:11 PM   #11
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I kind of had the same questions and handled it this way. My research into ETI shows that they are in the top 20% of revenue for all trailer manufactures and their revenue per employee is above the average of most of their competitors. This would indicate to me a well managed company. I could have purchased a report on ETI's finances from Dun & Bradstreet but I didn't think that was necessary. Just the fact of the backlog of orders on their production schedule says a lot. And they survived the great recession where Oliver ceased production for several years.

As for the exchange rate as the wise old trader said, it will fluctuate. I have been involved in grain marketing and have traded commodities on the Chicago Board of Trade, so you learn to take a profit when you have one. Yes, the US dollar has gotten a few cents stronger since I sent in the check to ETI, but I saw a profit and took it. Actually we gained over $4,000 just since last September when we put down our deposit. Unexpected international events can happen overnight and change the whole picture. It is a crap shoot out there and everyone has to do what they feel comfortable with. Loren
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Old 07-15-2015, 01:16 PM   #12
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Thanks for the input. It's reassuring to know that others did take the plunge of paying ETI for their rigs far in advance of pickup.
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Old 07-15-2015, 01:26 PM   #13
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I am using xe.com and they are offering me over 27% today. It is very simple to setup if you don't worry about the ETI banking information for free ACH transactions. You simply put in your bank information, the ETI address under recipient, accept the current offer and select a free mailed draft to ETI. They got my last Draft in about 7 days. The nice thing is you lock in the rate when you accept the offer. If you have any issues there is a 24 hrs support line and they are very helpful.
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Old 07-15-2015, 01:34 PM   #14
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We had the same discussions here at home. After looking at it all, we paid about 1/2 a few months back and last week when the rate got to .78 we sent a payment fed-x last friday and it got there monday. It converted at 1.256 and I was pleased at that.
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Old 07-15-2015, 01:50 PM   #15
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I kind of had the same questions and handled it this way. My research into ETI shows that they are in the top 20% of revenue for all trailer manufactures and their revenue per employee is above the average of most of their competitors. This would indicate to me a well managed company. ...

It's not surprising to read this.

In ETI's "story" on their website,
http://escapetrailer.com/our-escape-story/
Tammy writes of Reace "putting his degree in business to good use."
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Old 07-15-2015, 05:11 PM   #16
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When the exchange rate moved over the winter we made a big payment in February via a cashiers check. ETI deposited it immediately and we got a great rate. We had a small balance remaining ($2kUSD) that we paid about three weeks ago. All in anticipation of a July 16 completion date. So we basically paid in advance 90+ percent and saved about $4k on the exchange rate. In retrospect we would do the exact same thing in the future. We now have a $6.70 CAD credit with ETI.
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Old 07-15-2015, 06:08 PM   #17
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We took advantage of the exchange rate and paid early. Wrote 2 large cheques from our credit union about 3 months apart. Both arrived in about 8 days time. It may be the old fashioned way of sending money but it worked for me. I guess ED nurses don't worry as much as engineers, we just take the plunge. Our pick up date is October 8th, we still owe $200.00 Canadian.

Soooooooo excited.
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Old 07-15-2015, 06:19 PM   #18
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Don't worry, JStelly, you'll use it quite quickly once you get there. Don't ask how I know
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Old 07-15-2015, 06:27 PM   #19
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The trailer needs to be paid for at the time of completion and some have done that on pick-up, however, it seems that most by far pay large sums in advance, if not the whole amount.

We had an excellent rate when we paid the bulk a little while back and that protects us from any event that might suddenly ruin the rate. The rate in the last few days is the best in recent years, so it is a great time to pay. We will take advantage of that in paying the last few thousand soon.

You can take your chances and hope that the rate becomes even better, and maybe it will and maybe it won't, or you can do what most do and pay some large payments at different times with different rates, thereby protecting yourself from any big reversal.
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Old 07-15-2015, 06:32 PM   #20
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I am starting to get the picture that a lot of us have paid early. We didn't hit the peak of the exchange rate but in the grain trade they say if you hit the top price, you've waited to long. I do feel sorry for Reace battling it out with these volatile rates because for years it was essentially flat and a lot of his supplies come from the US. But again look at all of the US customers it has brought in. Loren
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