[Porsche]

Here is another scenario you folks might wish to consider:

What if we do not wish to commit to the higher payments of a 3-year, 36 month loan, and take a 5-year, 60 month loan. We're concerned about the much higher payment being a problem should we encounter any unpleasant financial surprises in the next few years. After all, <bleep> happens, right?

But, assuming all goes well, and we make larger payments, the same payments as we would have been required to make had we signed a 36 month loan contract, what will happen?

Then your loan will be paid off in exactly 36 months.

You might lose a little by doing it this way because they might have offered a lower interest rate originally had you signed up for the 36-month loan. If not, then the cost will be the same.

Let's look at how much we will save using one of the previous scenarios:

Let us say that you borrow $20,000. Now study the figures below:

$20,000 for 60 months @ 14.99% = $475.69/mo. x 60 mo. = $28,541.40

So, the cost to borrow this money on these terms = $8541.40

They gave you $20,000. You gave them back their $20k plus $8541.40. Clear?

Instead, pay $693.21/month, and the loan will be paid off in 36 payments.

$693.21 x 36 = $24,955.56

So, the cost to borrow this money on these terms = $4,955.56.

By paying an extra $217.52/month, you will save $3585.84, and you will own your car, free and clear, in only three years.

This plan will require additional discipline. But, in a financial pinch, should something unfortunate happen, you can revert to paying the regular monthly payment of $475.69 and keep your payment record perfect. That would extend the total number of payments, but you'll be safe and your payment history will be unblemished.

Oh yes, be certain to instruct the bank to apply your excess payment to the principal. Otherwise, they may call it an "early payment" for next month's bill. (They really are swine.) Make sure they apply it to paying down the principal and reducing the loan balance.