Worked examples / Borrowing
An $1,800 purchase spread over 18 months at 0%, while the cash sits in savings at 4%.
Borrowing leaves you $55.76 ahead of paying cash.
This is a worked example with illustrative figures, not data about any real person or company. Change any of them in the calculator and the answer changes with them.
How this answer was worked out| Borrowed | $1,800 - $0 = $1,800 |
| Monthly payment | $100.00 |
| Paid in all | $0 + $100.00 x 18 + $0 = $1,800 |
| Interest | $0 |
| Borrowing, in today's money | at 4% a year: $1,744 |
| Extra cost of borrowing | $1,744 - $1,800 = -$55.76 |
| Break-even cash rate | 0% |
Every formula is written out on the formulas page.
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