No. of Recommendations: 2
rookieJoe: "Oh, and the car loan is 0%."

You are an engineer, so I will assume that you ran the numbers, but 0% car loans where you forego a large rebate are not truly 0% (there is an inplied rate of interest resulting from the opportunity cost of foregoing the rebate) and are not even necessarily better deals than taking the rebate and financing elsewhere.

To calculate the implied rate of interest, take your loan payment and term, change the price to reflect the rebate, and then solve for the interest ratewould amortize that lower amount over the same term with the same monthly payment.

You simply hit one of my pet peeve issues.

Having said that, once the deal is closed, the 0% loan borrower has prepaid all the interest and rarely benefits from refinancing.

Regards, JAFO

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