Automobile Financing

Most research done on a car involved the Make, Model and reliability of the car. We occasionally get hung up on the color, the engine type and whether to buy new or used. After making our decision and doing all that research we go searching for our perfect car with only two objectives in mind-low…

Most research done on a car involved the Make, Model and reliability of the car. We occasionally get hung up on the color, the engine type and whether to buy new or used. After making our decision and doing all that research we go searching for our perfect car with only two objectives in mind-low price and the best interest rate.

Even if you were to get a car loan at just 8.5% APR, 18% of your car payments go towards interest. When you consider the number of car you will purchase over your life time, that's a lot of money flowing away from you and your family. Let's assume you'll buy a new car every 4 years for the next 44 years, so 11 cars in total. Each car will be funded for $ 10,550 and you get an interest rate at 8.5% for 48 months. You have a choice with how to pay for these cars. There are really only 5 ways to pay for a vehicle: You can buy them through a bank or financing company, lease them with a contract, pay cash for them, use an interest savings account, like a CD or use your 101 Plan Insurance Policy . Let's look at each method in further detail. Buying a car through a bank at 8.5% interest, would cost $ 260 per month, which is $ 3,120 per year, over 44 years that amounts to $ 137,280.

Leasing a car would cost a little bit more as you know. Let's then assume that leasing would cost you $ 175,000. Paying cash for the cars, will first require you to save up for the car so you will have to postpone buying the first car for 4 years, the overall cost of the cars would be $ 116,050, which is the $ 10,550 times 11 cars. The last two methods both involve having a banking mentality; the difference is using your own bank versus using someone else's.

Let's compare, assume for the last two methods, you understand the need to capitalize your bank, so you accumulate $ 5,000 per year, for 7 years before purchasing the first car, you could accumulate your money in a savings account and buy a certificate of deposit at someone else's bank in the amount of $ 5,000 with yield of 5.5% interest, however, the interest earned is taxable, so the after tax effect is 4%, assuming a 30% tax bracket, after 7 years you would have $ 41,071, so you buy your first car and continue making the $ 3,120 car payment to your savings account.

By year 50, you would have $ 258,927 in this account. Alternately, you could accumulate your money in a dividend paying permanent life insurance policy instead of someone else's bank, for the first 14 years putting your money in someone else's bank comes ahead, from that point forward a 101 Plan is favor in accelerating fashion, in fact, by year 50, you will have $ 964,638 that $ 705,710 more than putting your money in someone else's bank. Why is this? Because when you take control of the banking process, you are the only owner of the money, so you receive the profits that would otherwise have gone to the bank. It's that simple! And that powerful! There really is no comparison.

By using your 101 Plan, you'll soon be in a position to stop supporting the employees and share holders of banks and finance companies through all the interest you're paying to them and instead use that money to support you and your family, taking control of the banking process will prove to be one of the wisest decisions of your life time.