Price vs Cost Calculator

Lately, I've been thinking about buying a new car, which probably means I'd get an auto loan. Since I started thinking about this, I have been trying to calculate exactly what the loan would cost me. Then I started to realize the "price" of the loan is drastically different than the "cost" of the loan.

I currently use EmigrantDirect.com as my savings account (4.00%). If I got a loan, I would have to withdraw from savings; the money I would spend towards the loan payments would no longer be going into my savings account, therefore no longer earning interest.

I began to wonder if the loss of interest be significant. That is why I created this "Price vs Cost" Calculator. This calculator will show you exactly what your loss will be if you chose to make payments towards a car instead of putting that money into your savings account.

Note: If you are buying a vehicle to include sales tax. If you're buying a home increase the loan rate to account for property taxes.

Step 1: Calculate Payments
Loan Amount:
Months:
Loan Rate:		%
Loan Payment:	$521.36


Step 2: Calculate Cost
Loan Amount:	$27,000
Term:	60
Down Payment:
Savings Rate:		%
Monthly Payment:

post reply to this comment

Comment by bob roberts [Jan 25, 2007 @ 8:30 PM]

Hello, Your analysis leaves out the fact that you getting the use of a car for 60 months - which has its own costs, but scan also make you money (take that job 30 miles away, meet that rich girl 50 miles away...)

post reply to this comment

Comment by Will Ballard [Apr 29, 2007 @ 10:49 PM]

You're leaving out the depreciation costs on a new car. Stats I've read say the average new car looses 50% of its value in the first 4 years (www.daveramsey.com). Put that in to the mix to see how far upside down you get in the loan before it catches back up.

Leave Your Comment
Name:
Email:	(gravatar enabled)
URL:
Comment:
	or Cancel