Car Loan
Price of used car 23,500
Amount Financed
Total payment in 48 months (551.44 * 48) = 26, 469.12
Add down payment = 12, 00.00
Total finance cost = 27,669.12
Installed price of the new car
(27,669.12*93%) = 25,732.28
Finance charges = (Total finance cost – installment)*93%
= (27,669.12-25,732.28)*93%
= 1,801.26
Buying a car with cash is an easy and straightforward process: The buyer identifies and makes payment to the seller and then drive away from the new car without having to make any further extra payments on interest. This kind of payment encourages saving for other investment projects. You will own the car from the outset, giving you a valuable asset
When you decide to change your car, you can use it in part-exchange to get money off the value of your new vehicle. You will receive the full valuation of your car and won’t have any money deducted for wear and tear or excessive mileage
Financing the car over a shorter time will attract expenses of paying the interest loan, and the buyer doesn’t have control ownership of the car until full payment of the loan. Lower financing costs can encourage borrowing and investing. When rates are too small, they can spur excessive growth and inflation.
Your credit score will be assessed by the financial institution when applying for a loan or asset financing mortgage (Buttle M 2007). A poor credit score shows that you cannot make timely payments for the loan; hence you do not qualify for the loan. A higher score increases a lender’s confidence that you will make payments on time and may help you are eligible for lower mortgage interest rates and fee
References
Buttle, M (2007). I’m not in it for the money: Constructing and mediating interconnections in UK social banking, Geoforum 38(6):1076-1088