Wednesday, October 22, 2008
Narrow Margins?
I need a new car. I kind of like this one that costs $12,875, so I was looking at financing for it. So, I can get a loan for 4.4% if I put down 30%, so my loan would be for $9,013, cost me $205 per month, and $833 in total interest over the life of the loan. So, if instead of paying cash for the car I get the loan and put the extra $9,013 in a bank account earning 3.0% interest, I would earn a total of $1,148 in interest and be ahead $315 at the end of the 48 months. Nice! No wonder we have a financial crisis.
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2 comments:
Um, I don't think you can pay 4.4% interest and receive 3.3% interest and come out ahead. You need to reduce your savings principal each month by the amount of your car payment to keep your numbers comparative, which means you only save $606, right?
leave it to John to do the math. He probably did it "just for fun"
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