Buying a new car and I would like to know exactly how much a 0% APR is worth to compare against an optional rebate. The deal is you choose 0% APR for 60 months or you take $1,000 cash back.
Let’s say I can get an alternative loan at 4% APR, and the car costs $25,000 even.
What is the present value of the 0% offer?
*Note – I found a tool that gave me the amortization schedule for a 4% APR loan and the total interest came to about $2,600. But that $2,600 is spread over 5 years. So I need to know the present value of $2,600 spread over 5 years according to the amortization schedule of a 4% loan.
As I said in the question, I already looked at the amortization table. I can see that at 4% I will pay $2,624.78 over 5 years. And I can see for myself how it breaks down by month. What I want to know is: what is the present value of that?
Go with 4%.
Someday you might want to pay that loan off early.
And what if you wreck the car – the insurance will pay off your loan – lost money.
/
you will save a lot more than $1000 over 5yrs with zero percent financing
I don’t know the exact calc, but it’s a lot more than $1000 PV
just the first year alone at 4% will be almost $1000
take the 0%
you ‘ll probably be ahead of the game by your 15th payment
References :
4% is a great rate. Even at that low rate you would save the 1k in interest charges by going with the 0% in just a little over a year. Look at the amortization schedule to see how this works out.
References :
I would prefer to go with 0% APR as it’s yielding more and it also keeps the monthly payments less.
References :
Go with 4%.
Someday you might want to pay that loan off early.
And what if you wreck the car – the insurance will pay off your loan – lost money.
/
References :
It would help if there were more specific details on the deal you’re looking at, make of car, MSRP … from what you’ve described, it doesn’t sound like you’re getting much of a rebate, Generally getting 4-5-thousand back in lieu of 0% makes taking the rebate money and financing at 4% a better deal,
Most of the time car manufactures rebates arre in lieu of 0% financing, meaning you would be better off taking the rebate and financing on your own, provided you qualify for a 4% loan,
Also dig around on car forums and see what others are paying for the car you’re looking at, Example, you can get a hemi powered Dodge Charger with MSRP of 34k for 26 OTD,
Don’t be intimidated by a car Stealer, tell them what you’ll pay and walk away if they wont meet your price, but then again, its your money and I know lots of people over pay for their cars,
References :
facts are stubborn things 0% is a better deal
References :