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Take the cash..... Posted by Mike Lynch [Email] (#81) [Profile/Gallery] (more from Mike Lynch) on Mon, 29 Nov 2004 18:20:11 In Reply to: Model Year End Discount, HatchLover, Sat, 27 Nov 2004 19:14:18 Members do not see ads below this line. - Help Keep This Site Online - Signup |
....and finance at conventional rates. A $25,000 loan for 60 months at 4% has only a $2,600 finance charge. Another way to state that is $28,000 at 0% for 60 mos is $466 a month. $25,000 at 4% for 60 months is only $460.
Even if you couldn't get 4% even, which is the range for excellent credit availible without factory support, you're still better off taking the money as when you finance at 0% you lose any prospect of recouping any unearned finance charge by paying it off early. For example if you take the incentive your payoff is $25k, if you don't your payoff is $28k, and there will always be a higher payoff for the 0% loan. Few auto loans run full term.
And that's just the arithmentic, the future value of a $3,000 incentive spread out over 60 months is somewhat greater than $3,000, but that's not accounting but rather economics of which I'm fuzzy about.
posted by 63.197.222...
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