60-36 = 0

The loan, by the numbers.

Ok for those who like numbers and analysing and stats, this is the blog entry for you.

What I'm presenting here are just the numbers, as they are, and one 'could have been' option for comparison.

For those who would never purchase a new car, all these numbers would be too much  $ for you, and I totally respect that.

For those who live in the US, I am guessing prices are lower, perhaps even significantly lower. At least when they advertise car ads on the US channels, it seems that way :-)

For those buying now, the interest rates are less than half of what they were when I bought.

For those who live in Ontario in the cities where our fine Canadian car companies live, these prices will be higher than what you would have paid. I remember the first time I realized that I have to pay between $1500 and $2000 more (the times I looked) for 'delivery fee' for my vehicle. I guess it has to get to the prairies from Ontario somehow. I just never realized there was such a huge cost difference and that THAT cost would be tacked onto my bill. Ahh the joys of becoming more financially aware LOL

Here we go with some insta facts:

• Months on the actual loan - 60
• Months it took to pay off the loan - 36

• Money used as a downpayment $3500
• Trade in value of the beater van - $1300

"Interest"ing facts:

• Rate at the time of the loan - 7.92%
• Highest Amount of Monthly Interest - $181.09
• Lowest Amount of Monthly Interest - $1.77
• Total Interest Paid - $3727.70

                Year 1 Interest - $1990.99
                Year 2 Interest - $6600.00
                Year 3 Interest - $462.29

Lump Sum facts:

• Total Extra Money Paid down (beyond the monthly payment) - $12 285

                Year 1 Extra - $600
                Year 2 Extra - $6600
                Year 3 Extra - $5085

So why pay interest???

My primary reason for paying interest is that there were two prices on the vehicle: One with 0% interest and one with 'going rate' interest. It was the first time I realized that all those 0% interest ads I see on TV actually have a higher sticker price than if you opt for an interest based loan.

The 0% interest price was almost $10 000 more than the with interest rate. I had to sit down and scratch out math with the salesman to see which was the better deal. With interest, won.

Of course, this would truly only be a Better Deal if I paid the loan off early and thus, shortened the amount of interest I would pay over the life of the loan.  If I had no plan to do so then it would have probably been mathematically better to take the 0% deal.

Let's compare the two prices (I don't think I made any errors here, but ya never know)

Let's assume same basic info: down payment, trade in, taxes, fees and warranties

Price with interest rate (all taxes and fees included): $29 661.30
Interest Paid - $3727.70
Total - $33 389.00

Price without Interest rate (all taxes and fees etc included): $41 532.50

Difference - $8143.50


NOW

IF I  understand how to calculate correctly (jury is out on that one), if I had taken the interest option and only paid monthly amounts and no extra, my interest paid over the course of the loan would have been:

$29 661.30 x .0792 = $2349.17  x 5(years) = $11 745.85

(Have I done that all correctly??)


Did this cost a lot? Hell yes!!

Could I have found a used vehicle for less? yup, but all I have ever known before are used vehicles that cost me probably about $1000 a year in fixing things like brakes, shocks, new tires to replace the bald ones, rack and pinion (no clue if I spelled that correctly), starter issues and oodles of alternator issues with the van.

I have not had to call CAA once. I have not been stranded on the side of the road with a breakdown as I have with the previous three vehicles - with no cell coverage - and I could see the damn cell towers from my vehicle - explain that one LOL

Thus far this vehicle has not cost anything beyond oil changes. I do say THUS far. I know karma's waiting for me and something will come up that needs fixing...probably three days after I post this entry LOL


Everyone out there would make a different choice for a myriad of different reasons when it comes to purchasing transportation. I respect that. This is the choice I made.

I have learned so much during the time of this loan about money and interest and paying lump sums. That may well have been the biggest gift to me.