Borrow or pay cash?

Borrowing costs more, but keeps your cushion

Borrowing costs you $2,061 more than paying cash.

• The payment is $400.76 a month for 60 months: $28,346 in all, $4,046 of it interest and $300 fees.
• Borrowing only wins if your cash earns more than 8.1% a year. You put 4%.
• Paying cash would leave $3,000, less than the $6,000 you want to keep for emergencies.

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

Every formula is written out on the formulas page.

What the calculator asks you

• The price
• Down payment
• Loan rate a year
• Months to pay it off
• Loan fees
• Yearly rate your cash earns if you keep it
• Savings you would have left after paying cash
• Emergency money you want to keep

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• Is it worth it?The calculator this example comes from
• Before you decideA checklist of what is worth checking first