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0% wisdom......do not pass GO..... Posted by Mike Lynch [Email]  (#81) [Profile/Gallery]
(more from Mike Lynch) on Thu, 24 May 2007 11:31:12
In Reply to: 0 % for 60 months..in place of $ 3000.00...?, 9-5 Talladega, Wed, 23 May 2007 15:42:28 Members do not see ads below this line. - Help Keep This Site Online - Signup |
You need to measure the rebate in lieu of the 0% against the amount of the finance charge savings. Then you have to put on special future value goggles to look at it, you can't just do the arithmentic, time is money.
The only full value in 0% is if you use up the whole term. If you pay off early, and the vast majority of auto loans do, then taking a slightly higher payment with the rebate and standard interest rates, could result in a big interest refund if you pay off early and you've already captured the rebate.
For example $30k at 0% is $500 a month for 60 mos (easy arithnetic) whereas $27k (assuming a $3k rebate) at 6% ish is $522 and the finance charge is $4,320. So the 0% seems to save and additional $1,320, but only if you go the whole 60 months. If you pay off early you've already got the $3k plus whatever portion of the $4,320 finance charge you don't use.
If you follow this, then do not pass GO, do not collect $200, go directly to leasing........
, Thu, 24 May 2007 11:31:12 <-- Viewing This Message
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