Posts Tagged ‘Interest’

Mar. 4
4:31 pm

Brand New Car!!! More than you think.

posted by Brannon

car-picture1So, if you are like me at all, you have once or twice driven by a car lot and gazed out at the vast sea of shiny brand new cars.  I love cars.  I have told my wife that I am jealous of the Jay Leno and the Bruce Wayne/Batman car collections.

The other day, I had an individual ask me about a car loan for a brand new truck, with all the options and luxuries a truck manufacturer can offer.  They were trading in a vehicle and were taking about a $1,200.00 loss in the trade in (meaning that the dealer was not going to pay off their existing car loan completely).  They decided to put $2,000.00 down on the vehicle.  The out the door price after tax, licensing, and even a manufacturer rebate was just over $51,000. 00.

Now, they didn’t have the greatest credit in the world, which means the best interest rate the dealer could give them, depending on the financial institution, would be between 9% and 15%.  The interest alone on this vehicle, with the 9%, figuring on a 7 year term, would cost  $18,245.42!  And if you figure the higher 15% on the same terms, it would cost $47,482.41, just in interest! So what was already a high priced vehicle could translate to a whopping $98,663.44!  Cha-CHING!!

Before you get too depressed, I’m not in any way discouraging purchasing a new vehicle, but make sure that you are in a position to do so when you do.   This means, make sure that you have a good credit score so that you can get the very best interest possible.  Also, make sure that you can put a good healthy down payment on a vehicle of this amount of money.   For example, the same deal I showed said before, figuring on an interest rate of 4.99%, with a $5,000.00 down payment, for 7 years, the interest would be $8,746.01.  That’s quite a big difference.  And of course, the more money you put down, the less you’ll pay in interest.

So, when you look out at that big vast car lot full of brand new shiny cars, just remember what I told you, and make sure that you are in a position to get it.  When you are, you will enjoy that car so much better when you get a good deal on financing!

Tags: ,
Posted in Money & Finances | 1 Comment »

Oct. 28
12:40 pm

401k - Follow up

posted by Blake

Sometimes I believe we are a generation of procrastinators. We try and put off this and that for as long as we can. In the case of preparing financially for our future, now is always the time. Never wait for a better paying job or until after the kids are born. There are more advantages to being young than just looking good and we’ll talk about them.
Compounding interest is a beautiful thing and the younger you start, the better off you will be. Take these figures for example. If I deposited $5000 each year for 50 years into an account that doesn’t have compounding interest I would end up with $250,000. Now if I took that same $5,000 each year for 50 years and put it into an account with a 5% compounding interest rate, how much would I have? I’d have a whopping $1,156,413.98 and that is all thanks to compounding interest.
Now, lets look at the numbers again if I waited until after I had kids. Instead of starting at age 18 and going until I’m 68, I start at 35 and save until I’m 65. To make up for it though, I put in double. Instead of putting in $5,000 each year, I contribute $10,000. So what happens to $10,000 in 30 years at 5%? I’d only make $740,827.32 Even though I put in twice has much, I still come out with roughly $400,000 less.
There is a saying out there, Make your money work for you. That is exactly what compounding interest does. So get a 401k as soon as possible, open up an Individual Retirement Account(IRA) and start saving. Don’t worry about large amounts now. Put away as much as you can but do it consistently. Then when you are able to contribute more it won’t be a new habit that you must pick up.

Tags: ,
Posted in Entertainment | 3 Comments »

wood grain