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 Almost everyone has purchased a car during their lifetime (probably more than one).
Did you know that if you consider a typical finance charge of 10% that you could actually earn over 1/2 a million dollars if you invest that money instead of giving it to a bank to purchase your car?
In fact, this is exactly why banks like giving loans. They take the finance charges and invest it themselves.
For example:
Let's say you buy a car for $20,000 and finance it over 5 years at 8% interest.
Your monthly payments will be $405.53
And you'll end up spending $24,332 for the $20,000 car.
On the surface this doesn't sound bad because you'll be borrowing the money to buy the car over 5 years.
Well, let's assume that you bought the car straight out for $20,000 and then paid yourself back for 5 years at $405.53.
You would end up making $4,332.
Now let's invest that $4,332 for 50 years at 10% return.
That $4,332 would end up making you $508,537!!!
It's all about what you decide to do. Give the interest to the bank or give the interest to yourself.
What if you bought a $20,000 car every 5 years?
You could actually take each $4,332 that you would otherwise be giving to the bank and invest it each time you purchase a new car.
You could actually make over $1,323,105 if you buy a car every 5 years:
| $4,332 Invested at 10% Interest |
| 50 Years |
$508,537 |
| 45 Years |
$315,762 |
| 40 Years |
$196,063 |
| 35 Years |
$121,740 |
| 30 Years |
$75,591 |
| 25 Years |
$46,936 |
| 20 Years |
$29,144 |
| 15 Years |
$18,096 |
| 10 Years |
$11,236 |
| Total |
$1,323,105 |
| For illustrative purposes only. Not indicative of individual results. Assumes reinvestment of dividends and no effects of fees and taxes. |
Bottom line:
You can either use your own money or the bank will!
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